US Commerce Secretary Wilbur Ross defended the new agreement, saying in a statement: "We will closely monitor ZTE's behavior". Earlier this month, Trump announced he wanted to help ZTE, as part of negotiating a trade deal with China. In response to this situation, the USA government made a decision to prohibit the companies of that country for seven years to purchase components of the Chinese corporation, a measure that forced ZTE to temporarily cease its activities in the cell phone sales market. "That money will be forfeited if they violate anything", Ross told CNBC. Adding to those figures are the $361 million that ZTE already paid in the original settlement from a while back.
Mr Ross said the fine was the largest penalty ever levied by Commerce's Bureau of Industry and Security and pledged to continue monitoring ZTE's behaviour.
The Commerce Department denial order prevented ZTE from utilizing key technology from USA suppliers like Qualcomm and and Broadcom, making it hard to produce smartphones or telecommunications equipment. They'll have to pay a $1 billion fine, plus $400 million in escrow in case they do more shady sh*t. It also includes $400 million in escrow to cover any future violations and requires ZTE to change its board of directors and executive team within 30 days.
Today a U.S. Commerce Department spokesman said that an agreement is pending between the United States and ZTE that would see ZTE pay a hefty fine and in exchange be allowed to purchase crucial components again.
In return, ZTE can once again buy parts for its phones from American companies.
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"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.
As trade tensions have mounted, ZTE has become something of a sore point in those talks. It happens that I've been involved with the other negotiations with China. "But that's quite separate and apart from enforcement", he said. Separately, Qualcomm is trying to get Chinese approval for its pending US$44 billion acquisition of NXP Semiconductors NV NXPI.O .
William Reinsch, a trade expert at the Center for Strategic and International Studies, said the ZTE offer suggested Beijing could have concessions to Trump on trade but it remained unclear whether these were of equal value.