The U.S. has agreed to a $1.4 billion settlement with China's ZTE Corp. that would lift the seven-year export ban imposed on the telecommunications equipment maker, ending a dispute that had fed into broader trade tensions between the world's two largest economies.
Under the deal announced by the U.S. Commerce Department announced June 7, ZTE will be fined $1 billion and will place an additional $400 million in escrow in the event of future violations. These penalties are in addition to the $892 million in fines ZTE paid to the U.S under a March 2017 settlement, according to the announcement.
A compliance team handpicked by the U.S. will also monitor the company's operations for 10 years. ZTE must replace its entire board and senior leadership.
"Today, the [Bureau of Industry and Security] is imposing the largest penalty it has ever levied and requiring that ZTE adopt unprecedented compliance measures," Commerce Secretary Wilbur Ross said.
The U.S. had slapped the restrictions on ZTE after the Shenzhen-based company allegedly violated international sanctions and made false statements to the U.S. government. Last month, ZTE reportedly removed two senior executives from their roles in compliance with U.S. demands.
After the deal was announced, a bipartisan group of U.S. senators introduced a measure to reimpose penalties on ZTE for violating sanctions. The bill, offered as an amendment to the National Defense Authorization Act, would also prohibit U.S. agencies from buying or leasing equipment from ZTE. The sponsors include Senate Majority Leader Chuck Schumer, D-N.Y., and Sen. Tom Cotton, R-Ark., an important congressional ally of President Donald Trump.
ZTE's ban has been a crucial topic in high-level trade talks between China and the U.S.
Washington recently said it would impose 25% tariffs on $50 billion of goods imported from China containing industrially significant technology. China, meanwhile, reportedly offered to buy nearly $70 billion of American farm and energy products, the latest in a string of measures announced by Beijing in a bid to placate Washington.
