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Report: US, China agree on 'broad outline' of deal to lift ZTE ban

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Report: US, China agree on 'broad outline' of deal to lift ZTE ban

The U.S. and China have agreed on a "broad outline" of a deal that would seek to lift a U.S. ban on Chinese telecommunications firm ZTE Corp. In turn, ZTE has to implement "big changes" in management and board seats, and possibly pay hefty fines, The Wall Street Journal reported May 21, citing people with knowledge of the matter.

Details of the deal that would lift an existing order preventing U.S. companies from selling parts and software to ZTE are still being worked out, the people added, warning that the deal could still fall through.

Talks on lifting the ZTE ban come amid ongoing negotiations between the U.S. and China on a trade agreement, with the two countries setting aside trade threats for now.

Beijing reportedly offered to remove tariffs on U.S. farm products as part of the ZTE deal but one person said the White House did not accept, saying the two issues were separate.

"The White House was meticulous in affirming that the case is a law enforcement matter and not a bargaining chip in negotiations," the person said.

Any lifting of the ban on ZTE — which was based on findings that ZTE violated sanctions against trade with Iran and North Korea and then failed to make significant management changes as agreed with the Commerce Department — will need to pass U.S. national security reviews, sources told the Journal.

China's Foreign Minister Wang Yi is scheduled to visit Washington in the week of May 21 to continue the ZTE talks, the Journal reported, citing officials involved in his trip. Meanwhile, U.S. Commerce Secretary Wilbur Ross, who is overseeing the ZTE case, arrives in Beijing in the week of May 28.

On May 13, U.S. President Donald Trump tweeted he is working with Chinese President Xi Jinping to provide ZTE "a way to get back into business, fast." On May 20, following two days of trade talks in Washington, Trump's top economic adviser, Larry Kudlow, said that if any remedies against ZTE are altered, "they are still going to be very, very, tough, including big fines, compliance measures, new management, new boards."