U.S. reaches deal with China's ZTE, commerce secretary says

U.S. reaches deal with China's ZTE, commerce secretary says

U.S. reaches deal with China's ZTE, commerce secretary says

"We still retain the power to shut them down again", Commerce Secretary Wilbur Ross said Thursday in an interview on CNBC. The U.S. government feared that ZTE would then be exporting that technology to sanctioned countries again.

The agreement includes a $1 billion penalty for ZTE and another $400 million in trust to cover future possible violations. "This new settlement agreement sets another record, and brings the total penalties assessed on ZTE to $2.29 billion".

Ross said the USA will install its "own compliance people" to monitor the company, and shareholders will bring in new management and board.

However, Mr Ross stated that the ZTE agreement would not have any effect on the talks.

"This is a pretty strict settlement ..."

Noting that the deal imposed the strictest compliance ever on any company, American or foreign, Ross added: "We are literally embedding a compliance department of our choosing into the company".

US President Donald Trump met with his trade advisers on Tuesday to discuss China's offer to import an extra US$70 billion of American goods over a year in hopes of defusing a potential trade war between the world's two largest economies. It was reported that last month T-Mobile was going to walk away from an agreement worth more than $1 billion to distribute ZTE smartphones, among other products, in the U.S.

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A ZTE smart phone is pictured in this illustration photo taken April 17, 2018.

Chinese telecoms company ZTE will likely continue to exist, thanks to a deal brokered between it and the USA government today.

In return, the USA will be suspending - but not removing - the U.S. technology export ban that has caused the company to grind to a halt to begin with.

Negotiations over ZTE had been linked to wider trade talks between the USA and China. This comes despite an across-the-board rebuke from USA intelligence agencies who see ZTE as a national security threat. But Trump ignored the complaints, pushing Ross to settle the dispute. Both Republican and Democratic lawmakers condemned the reversal, saying the move would undermine national security.

A bipartisan group of Senators introduced legislation on Thursday that would restore the prior penalties.

"President Trump should be aiming his trade fire at China, but instead he inexplicably aims it at allies like Canada, Mexico and Europe", Senate Minority Leader Chuck Schumer, D-N.Y., said in a statement. "It's up to Congress now to act to reverse the deal".

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