The end of sanctions against embattled Chinese telecom equipment maker ZTE resolves an issue that had boosted Washington-Beijing tensions
US Commerce Secretary Wilbur Ross said his department will end sanctions against embattled Chinese telecom equipment maker ZTE, resolving one issue that has increased tensions between Washington and Beijing.
Speaking in a CNBC interview, Ross said the deal includes a US$1 billion penalty against ZTE and a US-selected compliance team to be embedded at the company to prevent further violations of the sort that prompted the Commerce Department to cut ZTE off from its US suppliers.
The settlement also requires ZTE to put US$400 million in escrow to cover any future violations and change its board of directors and executive team within a month.
“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 in the interview.
“This is a pretty strict settlement,” Ross added. “The strictest and largest settlement fine that has ever been brought by the Commerce Department against any violator of export controls.”
ZTE has figured into a larger web of bilateral tensions that have the potential to break out into an all-out trade war. US President Donald Trump came under criticism for announcing last month that he would reverse the ban, with some lawmakers warning that payments do not address security concerns over Chinese telecommunications equipment.
Lawmakers including Senate Minority Leader Chuck Schumer have accused Trump of dangling a ZTE reprieve as a way to convince Beijing to offer concessions that would allow the president to call off punitive tariffs on Chinese imports set to take effect next week.
