For those who came in late, ZTE ceased significant operations since the seven year ban was imposed on the company in April for breaking a 2017 agreement reached after it was caught illegally shipping goods to Iran and North Korea.
The preliminary deal includes a $1 billion fine against ZTE plus $400 million in escrow to cover any future violations. This was pretty much what was expected. As part of the deal, sources said, ZTE promised to replace its board and executive team in 30 days. It would also allow unfettered site visits to verify that US components are being used as claimed by the company, and post calculations of US parts in its products on a public website, they added.
The Commerce Department plans to amend its 2017 settlement agreement and count the $361 million ZTE paid as a part of that, allowing the United States to claim a total penalty of as much as $1.7 billion, the sources said.
Over the weekend, ZTE signed the agreement drawn up by the United States, the sources said, but the amended settlement has not been approved.
US President Donald Trump planned to meet with his trade advisers on Tuesday to discuss China’s offer to import an extra $70 billion of American goods over a year as a way to defuse a potential trade war between the world’s two largest economies.
However, ZTE’s resuscitation with US help has met stiff resistance in Congress, where both Democrats and Trump’s fellow Republicans have accused him of bowing to pressure from Beijing to help a company that has been labelled a threat to US national security.
US Senate Democratic leader Chuck Schumer said in a statement in response to Reuters’ report of the preliminary agreement. “Congress should move in a bipartisan fashion to block this deal right away.”