UPDATED 20:00 BST: The US commerce secretary said a deal had been struck with ZTE which will finally see the lifting of trade sanctions slapped on the China-based vendor, CNBC reported.
In a TV interview early today (7 June), Wilbur Ross said a “definitive agreement” had been reached, which “brings to a conclusion this phase of the development with them”.
The US Department of Commerce (DoC) later confirmed ZTE will pay a minimum of $1 billion in fines, and will face an additional $400 million in suspended penalty money.
Ross also stated ZTE will face the strictest compliance requirements ever placed on any company, whether based in the US or overseas.
In a statement, the DoC explained ZTE must retain a team of special compliance coordinators selected by, and answerable to, the department’s Bureau of Industry and Security (BIS) for a period of ten years, with the purpose of monitoring “on a real-time basis ZTE’s compliance with US export controls”.
The vendor is also required to replace its entire board of directors and senior leadership, and the deal also imposes a denial order suspended for ten years, which BIS can activate at any time should violations occur.
“We will closely monitor ZTE’s behaviour,” added Ross. “If they commit any other violations, we would again be able to deny them access to US technology as well as collect the additional $400 million escrow.”
The news follows wide speculation the vendor and authorities were set to carve out a deal to end sanctions on US companies – including major suppliers Qualcomm and Google-owner Alphabet – trading with ZTE.
The current row relates to statements made by ZTE during an investigation into breaches of a US ban on exports to Iran and caused controversy both in the US and China. As the row escalated in May, ZTE announced it ceased “major operating activities” due to the US actions.
In total, the US has now placed penalties of $2.29 billion on ZTE over the past 16 months, including the latest fines.