ZTE to Pay $1.7 Billion Settlement to Come Back to US

ZTE has been banned from purchasing sensitive technology from the US over its illegal sales to Iran and North Korea

The Trump administration has agreed to relax its punishment of Chinese telecom company ZTE, Commerce Secretary Wilbur Ross said Thursday. Chinese telecom firms like ZTE and Huawei are suspected of having ties to the Chinese military, and their products already are banned on many United States military bases.

New deal: Wilbur Ross, the USA commerce secretary, told CNBC that the agreement calls for ZTE to pay a $1 billion fine for violating trade agreements by dealing with Iran and North Korea.

The penalties are in addition to the $892 million in penalties ZTE already paid to the US government under a March 2017 settlement agreement. "This new settlement agreement sets another record, and brings the total penalties assessed on ZTE to $2.29 billion".

The deal includes a $1 billion penalty against ZTE and a compliance team, chosen by the USA, will be embedded at the company, Commerce Secretary Wilbur Ross told CNBC Thursday morning. The company will also have to keep a team of "compliance coordinators" for the next 10 years, which will be selected by the DoC.

The settlement in March 2017 was reached after ZTE was found to have violated a US trade embargo by engaging in a multi-year conspiracy to use equipment that originated in the United States for telecommunications networks in Iran. The White House didn't respond to a request for comment.

Reviving ZTE has been a personal focus for President Trump, whose government is in the middle of broader trade negotiations with the Chinese government.

More news: First lady had 'big operation,' can't fly for a month

"By letting ZTE off the hook, the president who roared like a lion is governing like a lamb when it comes to China", Chuck Schumer, the US Senate Democratic leader, said in a statement.

The company will pay a $1 billion fine and agree to establish and pay for an in-house compliance team staffed by US experts, Ross told CNBC. ZTE is also required under the new agreement to replace the entire board of directors and senior leadership for both entities. The company announced it was shutting down just weeks after the ban was announced. Instead of disciplining all employees involved, the department said, ZTE had paid some of them full bonuses and then lied about it.

The ban in effect nearly destroyed ZTE as it now relies on many components from American companies.

ZTE's return to the US market is good news for several American companies.

USA goods exported to China a year ago totaled US$130 billion while Chinese imports to the USA totaled US$506 billion.

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