POST TIME: 9 June, 2018 00:00 00 AM
US, China reach $1.4b sanctions deal over ZTE

US, China reach $1.4b sanctions deal over ZTE

Washington and Beijing have reached a deal to ease sanctions that brought Chinese smartphone maker ZTE to the brink of collapse, the US Commerce Department announced Thursday, reports AFP from Washington.

The agreement also follows a reported offer by Beijing to ramp up purchases of American goods and thereby drive down the yawning trade deficit between the world’s two largest economies—moving part-way towards meeting a key demand of US President Donald Trump in ongoing trade talks.

ZTE will pay a $1 billion penalty, and put another $400 million in escrow to cover possible future violations before being stricken from a sanctions list.

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.

Total US penalties imposed on ZTE now amount to $2.3 billion, according to the Commerce Department.

In April, the Chinese group was cut off from US technology products for violating US sanctions against North Korea and Iran—measures which threatened to put ZTE out of business.

Washington lawmakers were indignant last month after Trump offered to rescue ZTE as a personal favor to Chinese President Xi Jinping—even though the company is widely considered a liability for US national cyber-security.

Democrat and Republican senators denounced Trump’s offer to ease the ZTE sanctions as an offer that imposed punitive measures the company had already disregarded once before, while garnering no true concessions from China.

Commerce Secretary Wilbur Ross told CNBC on Thursday the deal was tough and would keep ZTE on a short leash.

“This is a pretty strict settlement. The strictest and largest settlement fine that has ever been brought by the Commerce Department against any violator of export controls.”