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Commerce Secretary: US reaches deal with China's ZTE

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Commerce Secretary: US reaches deal with China's ZTE

The deal apparently includes a massive fine for ZTE's non-compliance with an earlier settlement over its breaking of Iran sanctions, as well as the replacement of its management team.

Ross insisted that ZTE deal was an enforcement matter, separate from trade. The two countries have threatened to impose tariffs on up to $200bn worth of each other's products in a dispute over China's tactics to supplant U.S. technological supremacy, including demands that United States companies hand over trade secrets in exchange for access to the Chinese market.

"This is a pretty strict settlement". Those measures had threatened to put ZTE out of business. The agreement is also expected to call for other concessions from ZTE, including new board members and increased US oversight of its business.

The telecommunications equipment maker has been on life support since a seven-year US ban was imposed in April, breaking a 2017 agreement reached after it was caught illegally shipping goods to Iran and North Korea.

The Trump administration has struck a "definitive" deal with Chinese tech giant ZTE, Commerce Secretary Wilbur Ross announced Thursday, over strong congressional objections.

The US originally placed sanctions on ZTE for selling goods with US parts into Iran and North Korea, a violation of sanctions against those countries. The sanctions on ZTE have been a sore point amid trade talks between the US and China.

"The total deal is $1.4 billion".

A US-appointed compliance team will monitor the arrangement, which if broken will see ZTE surrender the $400 million and be banned from the United States component market for ten years.

One possibility is that China will finally approve Qualcomm's (QCOM) $44 billion purchase of the Dutch company NXP Semiconductors (NXPI), said Samm Sacks, a senior fellow in the Technology Policy Program at the Center for Strategic and International Studies.

"We will closely monitor ZTE's behavior".

The U.S. had imposed sanctions on ZTE for illegal sales to Iran and North Korea, but the Chinese company agreed to take corrective action.

The news comes as Trump presses ahead with plans to impose as much as $50 billion in tariffs on Chinese imports to punish Beijing for its alleged theft of American technology and know-how.

Despite this new change, the Pentagon has still ordered all ZTE and Huawei phones to be removed from its military bases.

President Donald Trump has drawn criticism from members of Congress for trying to reach a deal to save ZTE and the jobs it provides to Chinese workers.

Thursday's agreement was "a prerequisite for making broader progress", DeBusk said.

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