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The Trump administration has agreed to relax its punishment of Chinese telecom company ZTE, Commerce Secretary Wilbur Ross said Thursday.

The Chinese telecommunications giant ZTE has reportedly struck a preliminary agreement with the U.S. Commerce Department, so it can move towards getting back into business after a ban on purchasing American components and software. ZTE was assessed $2.29 billion in civil and criminal penalties by the Commerce Department and other USA agencies since a year ago.

Problems started to pile up for ZTE as soon as the U.S. ruling highlighted how the company had violated a sanctions agreement involving illegal exports to Iran and North Korea.

A Commerce Department spokesman said on Tuesday that "no definitive agreement has been signed by both parties". The ban on buying USA parts was imposed in April after the company lied about disciplining some executives responsible for the violations. He countered by highlighting that ZTE "buys a big percentage of individual parts from U.S. companies" and saying the telecom giant's fate reflects the U.S. relationship with China. "#VeryBadDeal", Republican Senator Marco Rubio of Florida said on Twitter after the administration's announcement.

Ross insisted that ZTE deal was an enforcement matter, separate from trade.

As part of this deal, ZTE will also have to replace its board within 30 days as well as accepting "unfettered site visits" from the United States to ensure that components are being used for their claimed objective.


Last year, ZTE paid over $2.3 billion to United States suppliers, a senior ZTE official told Reuters last month.

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.

Commerce Secretary Wilbur Ross announced an agreement with ZTE early Thursday that would impose additional financial penalties on and install US -approved compliance officials within ZTE.

"We will closely monitor ZTE's behavior". As a company, the bulk of its profits are in network telecommunications devices, but smartphones are the majority of its consumer business. "But it will do nothing to keep us safe from corporate & national security espionage".

The sanctions that the Trump administration had imposed on ZTE - and today's settlement - reflect those longer-term concerns and highlight not just the companies' dependence on the USA for advanced technology but also the attraction of their less expensive mobile phones for American consumers. "The Chinese public was up in arms because they believed the US was destroying ZTE".

The Senate measure would restore penalties on ZTE for violating export controls and bar USA government agencies from purchasing or leasing equipment or services from ZTE or Huawei Technologies Co Ltd [HWT.UL], another major Chinese firm. Shares of Qualcomm Inc rose as much as 4.7 percent while NXP jumped as much as 6.7 percent. Smaller makers of optical components, including Oclaro and Acacia, rely more heavily on ZTE's business.


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