China's ZTE Reportedly Strikes Preliminary Deal To Lift U.S. Ban

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He went on to say that ZTE would pay a $1 billion fine, as well as $400 million in escrow to cover "any future violations".

He added that he did not think the arrangement would have any effect on tariff talks with China.

Back in April, the United States government announced a complete and total ban of any U.S. components manufacturers from selling to Chinese telecom and handset giant, ZTE (HKG:0763). So the U.S. went nuclear on ZTE, imposing a seven-year ban on U.S. companies selling technology to the Chinese firm.

Now, ZTE has reportedly signed an agreement with the USA, but apparently the Commerce Department has not yet signed.

ZTE, the Chinese telecommunications company trying to resolve a seven-year United States export ban, has sent out reprimand letters to 35 current and former employees involved in illegal sales to Iran and is seeking to claw back bonuses from those who have left the company, according to people familiar with the matter.

It's looking more and more like ZTE will be saved, thanks to a new agreement between the China-based smartphone maker and the US government. The U.S. also needs China's help negotiating the denuclearization of North Korea ahead of a June 12 summit between President Donald Trump and North Korea's Kim Jong Un. Last month, Trump tweeted that he was looking for a way for ZTE to "get back into business, fast" because there were "too many jobs in China lost" from ZTE's shutdown.

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As part of the deal, sources said, ZTE promised to replace its board and executive team in 30 days.

Congress has threatened to try to stop the Trump Administration from signing an agreement with ZTE.

Citing "sources familiar with the matter", Reuters disclosed Tuesday that ZTE could soon be allowed to buy the USA products. Senate Minority Leader Chuck Schumer told Reuters he thought Congress should immediately take action to try to block the deal.

USA companies provide an estimated 25 to 30 percent of components in ZTE's equipment, which includes smartphones and gear to build telecommunications networks. It agreed to pay $890 million in fines, dismiss four employees, and discipline 35 others by either denying them their bonuses or reprimanding them. It would also allow unfettered site visits to verify that US components are being used as claimed by the company and post calculations of USA parts in its products on a public website.

Things have changed dramatically for ZTE in the last few weeks.