United States strikes ZTE deal, commerce secretary announces, but congressional critics object

United States strikes ZTE deal, commerce secretary announces, but congressional critics object

Amidst the white-hot trade tension brewing between the worlds two most powerful superpowers, U.S. President Donald Trump surprisingly announced his intention to help the beleaguered Chinese company which we covered here last month.

ZTE plead guilty to conspiring to violate USA sanctions against Iran and North Korea in a United States court a year ago. On Tuesday, Commerce Department spokesman James Rockas confirmed that "no definitive agreement [had] been signed by both parties". At the time, the Chinese government complained that the action could put the company, a major employer and star of the Chinese technology industry, out of business. Republican Senators Marco Rubio and Susan Collins are co-sponsors, as are Democrats Richard Blumenthal and Bill Nelson.

Under the deal, the Chinese giant will also have to change its entire board of directors and retain outside legal compliance specialists who will report to the Commerce Department for 10 years. However ZTE's immediate woes now appear to be coming to an end; the Bureau of Industry and Security and ZTE have come to an agreement that will see the U.S. tech ban suspended in return for a massive settlement, leadership changes, and allowing significant & ongoing United States oversight of the company's compliance.

Ross said the penalty is the largest the Commerce Department has ever levied. The company already has a U.S. court-appointed monitor.

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It's been a really rough couple of months for ZTE, but according to new reports, the company's troubles may soon be over as it has apparently almost reached a deal with the U.S. government. They raised national security concerns about ZTE, a view shared by U.S. intelligence agencies and other countries.

ZTE's deal with the US will likely get it back into business late next week with its stock likely to resume trading in 2-3 weeks, according to analysts at Jefferies in Hong Kong.

Senate Democratic Leader Chuck Schumer tweeted the "deal with ZTE proves the president just shoots blanks".

Trump argues that bilateral trade deficits reflect bad deals for the US that need to be rewritten.

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He was reassured that the deal allows for embedded monitors - likely, retired American government officials - to "be the eyes and the ears of the US government to make sure ZTE did not continue to be an espionage arm of the Chinese government". The first settlement with ZTE set a record for civil and criminal penalties in an export control case.

Qualcomm Chief Executive Officer Steven Mollenkopf said on Thursday he hoped the ZTE agreement would pave the way for the NXP approval.

Oclaro shares are up 1.1%.

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