Home Government Tech Policy ZTE, US sign deal for company to resume business

ZTE, US sign deal for company to resume business

The way has been cleared for Chinese telecommunications equipment vendor ZTE Corporation to resume its US business operations after an agreement was signed by the US and the company on Wednesday.

The company was hit with a seven-year ban on using American-made parts in its equipment in April for violating the terms of an agreement over breaking sanctions on exporting products to Iran and North Korea.

ZTE shut down its main business activities in the US on 9 May.

But following the intervention of US President Donald Trump, a deal was worked out for ZTE to return to business by paying a fine of US$1 billion, changing its management team and depositing US$400 million in an escrow account against possible future transgressions.

According to  Reuters, the escrow agreement was signed on Wednesday and the US Department of Commerce said the ban would be formally lifted once the US$400 million was deposited.

Apart from the terms cited above, ZTE must also employ an external monitor to check its compliance with the other conditions.

ZTE has also agreed to allow the government to visit its premises to verify that US components are being used as advertised. It is also required to post details on its website about the components used.

But some politicians in the US are unhappy about the deal, with Democrat Senator Chuck Schumer describing it as “awful”. He said it would “undermine our national and economic security”.

As part of the National Defence Authorisation Act, the US Senate has passed legislation that would reinstate the ban.

But US President Donald Trump is expected to negotiate and get the ban stripped out of the final version of the bill. The House has already passed a version of the bill that does not include the sales ban.

Schumer said he hoped his Republican colleagues in the House and Senate would “maintain the Senate’s strong language in the defence bill".

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Sam Varghese

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A professional journalist with decades of experience, Sam for nine years used DOS and then Windows, which led him to start experimenting with GNU/Linux in 1998. Since then he has written widely about the use of both free and open source software, and the people behind the code. His personal blog is titled Irregular Expression.

 

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