US Suspends Tech Ban In Exchange For Record Fines & US Oversight

The Trump administration is putting the finishing touches on a deal with ZTE. Bloomberg’s Jodi Schneider reports

Former Minnesota Republican Senator Norm Coleman represents ZTE Corp, which scored a major victory today as the US Commerce Dept. announced a deal to lift sanctions imposed on it. The team will monitor ZTE's adherence to USA export control laws - an arrangement the department described as the most stringent requirements it has ever imposed. "If they commit any further violations, we would again be able to deny them access to USA technology" and levy another $400 million in fines.

"We will closely monitor ZTE's behavior", Commerce Secretary Wilbur Ross said in a statement.

The immediate ramifications of this deal are that although ZTE is becoming cash-poorer, this will allow them to resume day-to-day business operations and get the business moving again.

On Tuesday, it was reported that ZTE, the fourth-largest smartphone maker in the United States by market share, had agreed in principle to a settlement that would lift the seven-year Commerce Department ban preventing USA companies from doing business with it.

ZTE's survival has been a topic of discussion in high-level U.S.

After Reuters reported that ZTE has signed a preliminary agreement with the U.S. Commerce Department, a spokesperson said in an official statement for Politico that "no definitive agreement has been signed by both parties" and that there are no other updates at this time. That penalty was assessed following an investigation showing that ZTE had violated USA sanctions and had provided technology to Iran and North Korea.

European Union sets July timeframe for U.S. tariff reprisals
According to CNN , the two leaders were discussing on May 25 new USA tariffs imposed on steel and aluminum imports from Canada . Trump ended that temporary relief this month, seeking to pressure the other countries to cut new trade agreements with the U.S.

"We are literally embedding a compliance department of our choosing into the company to monitor it going forward".

Still, the resolution of the ZTE case may clear the way for the USA to make progress in its trade talks with China. In its place, Commerce has levied $1.4 billion in fines and penalties, required the replacement of the company's senior management and board, and will install compliance officers inside the company.

ZTE did not respond to repeated requests for comment. The government will suspend the 10-year ban but it can activate the ban if there are any violations. According to Trump administration officials, ZTE gave numerous wayward executives their full 2016 bonuses and then lied about it to the USA government.

ZTE's return to the USA market is good news for several American companies. Marco Rubio tweeted the the deal "will do nothing to keep us safe from coporate and national security espionage".

The ban in effect nearly destroyed ZTE as it now relies on many components from American companies. This includes once again being able to receive Qualcomm SoCs and the Android OS for their smartphones, along with the numerous components used in their networking gear.

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