By RFE RL
(RFE/RL) — The United States and China have reached a deal that allows the Chinese telecom giant ZTE Corp. to stay in business in exchange for paying an additional $1 billion in fines for having violated U.S. sanctions against Iran and North Korea.
The fines announced on June 7 come on top of $892 million ZTE has already paid for breaking U.S. sanctions by selling equipment to North Korea and Iran.
The Commerce Department said that ZTE must also put $400 million in escrow — a sum that would be forfeited if it violates the latest agreement.
A previous U.S. ban on ZTE purchasing equipment from U.S. suppliers — which ZTE said was threatening to put it out of business — was also lifted under the deal.
In addition, a compliance team chosen by the United States will be embedded at ZTE and the Chinese company must change its board of directors and executive team under the deal.
U.S. President Donald Trump has drawn fire from Congress for intervening in the case to rescue a Chinese company that had violated U.S. sanctions in ways deemed “dangerous” by some legislators.
“Despite his tough talk, this deal with ZTE proves the president just shoots blanks,” said Senate Democratic Leader Chuck Schumer.
In April, the Commerce Department barred ZTE from importing U.S. components for its cell phones and other telecom equipment for seven years, a penalty imposed for allegedly deceiving U.S. regulators after it settled charges last year of sanctions violations.
But ZTE warned that the decision amounted to a death sentence on its business, which relies on U.S. parts, and it announced that it was halting operations. The ban also hurt U.S. companies like Qualcomm that supply ZTE.
Trump intervened in the ZTE case last month, tweeting that he was working with Chinese President Xi Jinping to put ZTE “back in business, fast” and save tens of thousands of Chinese jobs.
He later tweeted that the ZTE talks were “part of a larger trade deal” being negotiated with China.
The latest ZTE settlement may clear the way for the United States to make progress in its broader trade talks with China. The two countries have threatened to impose tariffs on up to $200 billion worth of each other’s products in a dispute over China’s policy of demanding that U.S. companies hand over trade secrets in exchange for access to the vast Chinese market.
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