China's ZTE signs preliminary agreement to lift USA ban

07 June, 2018, 16:42 | Author: Kevin Carter
  • A sign for the ZTE booth is seen at the Mobile World Congress the world's largest mobile phone trade show in Barcelona Spain

A sign of ZTE Corp is pictured at its service centre in Hangzhou, Zhejiang province, China May 14, 2018.

Reuters says that the deal will include ZTE paying a $1 billion fine for violating United States sanctions, as well as putting additional funds in escrow in case of any future violations.

The deal also includes a suspended 10-year ban on buying us components that could be activated by any violations, people familiar with the arrangement told Reuters.

According to Reuters, ZTE has signed a preliminary agreement that will lift the ban on USA companies providing ZTE with goods.

The telecommunications equipment maker has been on life support since a seven-year US ban was imposed in April, breaking a 2017 agreement reached after it was caught illegally shipping goods to Iran and North Korea. This deal has been highly controversial, as a number of members of the U.S. Senate, including lawmakers from both the Republican and Democratic parties, have stated ZTE's phones are a major security threat, claiming they could be used by the Chinese government to spy on U.S. citizens. The U.S. position has been that the fine is a law enforcement action, which should not be included in the discussions around trade.

More news: Microsoft has acquired GitHub

Reuters reports that "ZTE promised to replace its board and executive team in 30 days". ZTE's failure to comply with these terms triggered the suspended denial order that prohibits American companies from doing business with the Shenzhen-based company, plunging it into crisis. But now, Reuters is reporting that ZTE has signed a preliminary deal that could allow ZTE to resume operations.

Regardless of those talks, the Trump administration is facing a deeply hostile reaction from Congress, where there is bipartisan opposition to the deal.

Since the decision came into force last month, President Donald Trump has appeared to open the door on a compromise after announcing on Twitter that he would help the group "get back into business".

In November 2016, ZTE pledged to dismiss four senior employees and discipline 35 others by either reducing their bonuses or reprimanding them as part of the original deal with the US Commerce Department.

A new report claims ZTE has signed a preliminary agreement with the USA government that would allow it to once again use parts from US phone suppliers. But it seems ZTE is definitely in a better position now than it was just a few weeks ago.

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