US, China reach $1.4 billion sanctions deal over ZTE: Commerce Dept

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

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

The deal allows ZTE to continue to do business in the USA while paying a $1 billion penalty for violating sanctions against Iran.

In April, the Commerce Department blocked ZTE from importing American components for seven years, having concluded that it had deceived USA regulators after it settled charges last year of violating sanctions that were imposed against Iran and North Korea.

As it stands, one of China's leading telecommunication's companies is banned from using suppliers in the United States for seven years, forcing the group to close down operations at its Shenzhen factory following the US Commerce Department ruling.

"If ZTE were to close down, I have every belief that their assets would then be absorbed by Huawei which is another giant telecommunication company. That's good", U.S. Senator Marco Rubio tweeted.

Ross, speaking about the agreement on CNBC on Thursday, said he did not think the arrangement would have any effect on tariff talks with China.

US media reported late last month that the US Commerce Department had brokered a new deal under which ZTE would pay a substantial fine, hire American compliance officers to be placed at the firm and make changes to its current management team.

But some analysts said that trading lenience on ZTE for Chinese agreement to buy more American products would leave major issues unresolved.

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The U.S. government has always been concerned with possible national security threats posed by ZTE and Huawei.

Ross said on Thursday the penalty is the largest the Commerce Department has ever levied. "It's unprecedented to have US agents as monitors ..." "But it will do nothing to keep us safe from corporate & national security espionage". The U.S. Department of Commerce wishes to amend the settlement agreement so that the $361 million that the company had already paid would be included.

"By letting ZTE off the hook, the president who roared like a lion is governing like a lamb when it comes to China", Chuck Schumer, the US Senate Democratic leader, said in a statement.

Several U.S. chipmakers, including Qualcomm and Intel, count ZTE as a customer.

Trump met with his trade advisers on Tuesday to discuss China's offer to import an extra $70 billion of American goods over a year in hopes of defusing a potential trade war between the world's two largest economies. "The ZTE case was a thorn in the side for China ..."

Shares in NXP Semiconductors NV rose 4.9 percent in NY after news of the ZTE deal was announced. Its global smartphone market share is about 11 percent, and its total revenue was about $92 billion in 2017.

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