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

China's ZTE said it ceased major operations last month due to the ban

After the U.S. Department of Commerce banned ZTE from importing US-made components, due to the company violating an agreement it made in 2017, ZTE shut down most operations while it fought to lift the ban. The Trump administration had previously announced that it was banning USA companies from selling ZTE components for seven years, components critical to its entire product line.

In April, Washington prohibited ZTE from buying parts from U.S. companies, including Qualcomm, Corning and Google.

Commerce Secretary Wilbur Ross announced a deal with Chinese telecommunications company ZTE amid U.S.

One week after announcing it had ceased major operations as a result of the ban, President Trump tweeted that he was working with Chinese president Xi Jinping to find a way for ZTE to "get back into business, fast". This means that they could be fined up to $1.7 billion in total.

Senate Majority Leader Charles E. Schumer called for Congress to reverse the decision, which is unlikely. The sanctions on ZTE have been a sore point amid trade talks between the US and China. The Pentagon earlier this month ordered retail outlets on USA military bases to remove from the shelves smartphones made by the two companies.

There was no immediate comment from the Chinese government on the ZTE agreement.


The deal also forces ZTE to make changes to its management. Under the terms of its guilty plea, ZTE paid $890 million in fines, and agreed to fire some senior staff, and strip bonuses from 35 others.

"The objective was not to put ZTE out of business", Treasury Secretary Steven Mnuchin said. They must also post calculations of the usage of USA -made components on a public website.

The ZTE deal comes after weeks of tense negotiations between the Trump administration and the Chinese government. The U.S. position has been that the fine is a law enforcement action, which should not be included in the discussions around trade. The two sides had threatened each other with waves of new tariffs on tens of billions of dollars of exports. Specifically, Bloomberg reported that the USA might lift the export ban if Chinese regulators approve Qualcomm's $43 billion bid for NXP.

Thursday's agreement was "a prerequisite for making broader progress", DeBusk said.

ZTE supplier Oclaro Inc rose nearly 1% while Acacia Communications Inc. was down 1.5%. Smaller makers of optical components, including Oclaro and Acacia, rely more heavily on ZTE's business.

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