Commerce Secretary says U.S. has deal with China to resurrect ZTE

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The combined penalties paid by ZTE now add up to $2.29 billion, with an additional $400 million in escrow that the United States can withdraw in case the Chinese company runs afoul of the deal.

ZTE previous year settled criminal and civil charges in connection with its violation of USA sanctions on Iran and North Korea.

Early reports claimed that ZTE had already signed an agreement with the U.S. with these terms, but a spokesperson in touch with Politico says that "no definitive agreement has been signed by both parties". The company relies on US -made components for many of its products, and also sells many of those products to USA customers. At the time, the Chinese government complained that the action could put the company, a major employer and star of the Chinese technology industry, out of business.

"At about 6:00 A.M. this morning, we executed a definitive agreement with ZTE and that brings, that brings to a conclusion this phase of the developing with them", Ross said in an interview with CNBC.

Under the new agreement, ZTE will have to pay a $1 billion fine and replace its entire board of directors and senior leadership. This would allow the United States to quickly re-instate the ban if ZTE violates the terms of the 10 year agreement.

It had been speculated that any deal could be scuppered by resistance from both Democrats and Republicans in US Congress, who believe Trump is bowing to pressure and that ZTE could be a possible threat to national security. The company has 20 US offices or research centers and has sponsored five National Basketball Association teams. That was a potential death blow to ZTE, which relies on USA technology for an estimated 25 to 30 percent of its components.

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USA intelligence agencies have concluded that ZTE poses a "significant" national security threat.

Senate Democratic leader Chuck Schumer called the agreement "a 180-degree turn away from the president's promise to be tough on China".

The Senate measure would restore penalties on ZTE for violating export controls and bar US government agencies from purchasing or leasing equipment or services from ZTE or Huawei Technologies Co Ltd [HWT.UL], another major Chinese firm. The U.S. government has not signed the deal yet, however, ZTE has agreed to a previously drawn up deal.

But it came shortly after Chinese officials offered to buy an additional $70 billion in USA goods to cut the trade deficit, moving toward meeting one of Trump's central demands on trade.

Qualcomm Chief Executive Officer Steven Mollenkopf said on Thursday he hoped the ZTE agreement would pave the way for the NXP approval.

ZTE supplier Oclaro Inc was up 1.3 percent while Acacia Communications Inc was down 0.6 percent.

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