ZTE reportedly signs deal that would end export ban

Penalties amounted to $1 billion, and ZTE agreed to install new management and a compliance team picked by the U.S., Ross told CNBC.

Washington lawmakers were indignant last month after Trump offered to rescue ZTE as a personal favor to Chinese President Xi Jinping - even though the company is widely considered a liability for USA national cyber-security. The decision amounted to a death sentence to ZTE, which relies on US parts and which announced that it was halting operations.

The trouble with ZTE goes back to previous year when the company admitted to selling USA technology to Iran and North Korea in violation of economic sanctions. 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.

Reuters reported earlier this week that the two sides were close to reaching a deal that would allow ZTE to resume business as usual.

ZTE has already paid a $1.19 billion fine for violating USA sanction.

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

ZTE's survival has been a topic of discussion in high-level US-China trade talks.

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The probe found that ZTE bought US components and incorporated them into its equipment, illegally shipped them to Iran, and devised elaborate schemes to hide the illegal activity.

ZTE did not immediately respond to requests for comment. Not only that, but the entire board and executive teams must be fully replaced within 30 days from the time of signing the agreement. Post calculations of USA parts in the company's products would also have to be on a public website. The Chinese authorities' involvement, on the backdrop of ongoing trade negotiations with the USA, have saved ZTE from almost-certain death. The U.S. also needs China's help negotiating the denuclearization of North Korea ahead of a June 12 summit between President Donald Trump and North Korea's Kim Jong Un. Specifically, Bloomberg reported that the US might lift the export ban if Chinese regulators approve Qualcomm's $43 billion bid for NXP.

"The objective was not to put ZTE out of business", Treasury Secretary Steven Mnuchin said. The gear maker pleaded guilty a year ago in federal court in Texas for conspiring to violate USA sanctions to Iran.

The Chinese Commerce Ministry said Thursday that some progress was made in talks that ended last weekend.

"The hope is accommodating China's concerns on ZTE will open the door to favorable decisions on Qualcomm and other deals", said Altbach.

Oclaro shares are up 1.1%.

(Copyright © 2015. All Rights Reserved.)
 
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