Senators Push Defense Amendment to Restore ZTE Sanctions

08 June, 2018, 10:48 | Author: Salvatore Jensen
  • ZTE has been banned from purchasing sensitive technology from the US over its illegal sales to Iran and North Korea

ZTE will have to pay a $1B penalty plus put $400M in escrow to cover future violations and embed a US-picked compliance team.

As part of the deal, ZTE has also reportedly promised to replace its board and executive team in 30 days.

After much negotiation with the Trump Administration, Secretary of Commerce Wilbur Ross confirmed this morning that ZTE, the Chinese telecommunications giant, has agreed to a $1 billion fine.

ZTE originally violated US sanctions against Iran by conspiring to "supply, build, and operate telecommunications networks in Iran using USA -origin equipment in violation of the US trade embargo", according to a statement from the Commerce Department.

ZTE plead guilty to conspiring to violate U.S. sanctions against Iran and North Korea in a United States court past year.

According to a report from Reuters, ZTE has reached a deal with U.S. authorities that would lift a ban that prevents it from buying parts from usa suppliers.




Shares in NXP Semiconductors NV rose 4.9 percent in NY after news of the ZTE deal was announced.

A Van Hollen provision already in the defense bill would require Trump to certify to Congress that certain Chinese telecommunications companies such as ZTE and Huawei have obeyed USA laws for one year and worked in cooperation with US investigators before pulling back the economic sanctions imposed on the companies. "Export control and sanctions laws should not be negotiable, because fidelity to the rule of law is a key part of what distinguishes the US from a country like China that is ruled by a Communist dictatorship". "We can not move forward with this danger to national security without doing something about ZTE". The first sanctions followed a probe into illegally shipped equipment to Iran and North Korea. Analysts estimate that four-fifths of ZTE's products have American companies. For this "pattern of deception, false statements, and repeated violations", the US Commerce Department issued the ban in April. That left a USA deficit of more than $375 billion.

"There is absolutely no good reason that ZTE should get a second chance and this decision marks a 180-degree turn away from the president's promise to be tough on China", Chuck Schumer, the Senate's top Democrat, said in a statement. The U.S. Department of Commerce wishes to amend the settlement agreement so that the $361 million that the company had already paid would be included.

There was no immediate comment from the Chinese government on the ZTE agreement.

U.S. President Donald Trump arrives for a welcoming ceremony in Beijing, China, November 9, 2017. As a result, ZTE was banned from using US -made components for 7 years starting from April 2017. Qualcomm rose 1.3 percent.

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