Commerce Department announces deal with ZTE

Source: The Hill | June 7, 2018 | Jacqueline Thomsen and Sylvan Lane

The Commerce Department on Thursday announced that it had reached a deal to lift penalties on Chinese telecommunications firm ZTE.

The deal to revive ZTE, which violated U.S sanctions and is considered a national security threat by U.S. officials, comes after President Trump pledged to loosen restrictions that had effectively shut down the company.

“The purpose of this settlement is to modify ZTE’s behavior while setting a new precedent for monitoring to assure compliance with U.S. law,” the Commerce Department said in a statement.

Commerce Secretary Wilbur Ross called the new sanctions “the largest penalty [the department’s Bureau of Industry and Security] has ever levied” and said they impose “unprecedented compliance measures” on ZTE

Ross first announced the deal in an early Thursday morning interview.

“At about 6 a.m. this morning, we executed a definitive agreement with ZTE. And that brings to a conclusion this phase of the development with them,” Ross said in an interview on CNBC’s “Squawk Box.”

The Commerce Department will impose a $1 billion penalty against the telecommunications giant and that a U.S.-selected compliance team will be embedded in the firm. The team will stay at ZTE for 10 years and report to U.S. officials on the company’s conduct.

“We are literally embedding a compliance department of our choosing into the company to monitor it going forward. They will pay for those people but the people will report to the new chairman,” Ross said.

The deal will also require the company to change its board of directors and executive leadership within the next 30 days.

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