Commerce Secretary Wilbur Ross says that a "definitive" deal has been reached with ZTE (VIDEO)
U.S. Commerce Secretary Wilbur Ross told CNBC this morning that the U.S. has indeed made a "definitive deal" with Chinese phone and network equipment manufacturer ZTE that will remove the ban preventing the company from sourcing parts from the states. Ross' comments are the latest in this long running soap opera that involves the fourth largest smartphone vendor in the U.S. Just the other day, a preliminary agreement that would allow the Commerce Department to lift the crippling export ban against ZTE was rumored to be reached by the U.S. and China, but was later disavowed by a Commerce Department official.
The terms of the deal call for ZTE to pay a $1 billion fine, put $400 million in escrow to cover any future violations, and the company has 30 days to overhaul its Board of Directors and executive team. In addition, a U.S. compliance team, chosen by U.S. government officials, will be placed inside ZTE. In return, the U.S. export ban will be lifted.
The ban was slated to run through mid March 2025. It was originally stayed by the Commerce Department in 2017 after ZTE promised to withhold bonus checks and place a letter of reprimand in the files of employees involved in the company's illegal sales to North Korea and Iran. The Commerce Department also fined ZTE a record $1.19 billion for breaking U.S. sanctions against the two countries. When it became apparent that ZTE was not complying with the agency's penalties in a timely manner, the stay was lifted on the export ban, which almost forced ZTE to shut down.