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. Hopefully this time ZTE respects the wishes of the USA government to not sell to banned countries and ultimately this may lead to China and the us finally coming to a real agreement on the larger on-going trade discussion.
ZTE ceased major operations since the seven-year ban was imposed on the company in April for breaking a 2017 agreement reached after it was caught illegally shipping goods to Iran and North Korea.
The decision amounted to a death sentence to ZTE, which relies on US parts and which announced that it was halting operations.
Shares in NXP Semiconductors NV rose 4.9 percent in NY after news of the ZTE deal was announced. Separately, Qualcomm is trying to get Chinese approval for its pending $44 billion acquisition of NXP Semiconductors NV. "Export control and sanctions laws should not be negotiable, because fidelity to the rule of law is a key part of what distinguishes the US from a country like China that is ruled by a Communist dictatorship". Democratic Sen. Chuck Schumer of NY immediately responded to today's announcement: "Despite his tough talk, this deal with ZTE proves the president just shoots blanks".
The ban came as a result of ZTE failing to punish staff who sold kit featuring American technology to Iran and North Korea. "It's that ZTE is a state-controlled telecommunications company that poses significant espionage risks, which this agreement appears to do little to address". The company has 20 USA offices or research centers and has sponsored five National Basketball Association teams. Any violation can let the USA reimpose sanctions.
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Under the terms of the settlement, ZTE is paying an immediate $1B fine, on top of the existing $892M in fines they've already paid related to their misconduct in this case.
Senate Democratic leader Chuck Schumer called the agreement "a 180-degree turn away from the president's promise to be tough on China".
Commerce officials issued new sanctions on ZTE after determining that the gear maker violated terms of its 2017 settlement agreement with the US involving the shipped gear.
Co-sponsors include Republican Senators Marco Rubio and Susan Collins, and Democrats Richard Blumenthal and Bill Nelson. USA goods exported to China a year ago totaled $130 billion while Chinese imports to the US totaled $506 billion.
Shares of Acacia and Oclaro extended their gains on Tuesday in heavy trading after news of the preliminary deal, ending up 1.7 percent and 1.8 percent, respectively.