The Commerce Department said Thursday that ZTE must also put $400 million in escrow - a sum that it would forfeit if it violated Thursday's agreement. These penalties are in addition to the $892 million in penalties ZTE has already paid to the U.S government under the March 2017 settlement agreement. On Tuesday, Commerce Department spokesman James Rockas confirmed that "no definitive agreement [had] been signed by both parties". Although not specifically stated, the announcement implies that ZTE will no longer be banned from selling technology to other countries and that American companies will no longer be banned from selling components to ZTE, either.
In addition to the fine, a compliance team chosen by the U.S. will be embedded at ZTE and the Chinese company must change its board and executive team. The U.S.is maintaining its 10-year export ban on ZTE, but the ban is indefinitely suspended and is likely to remain suspended if ZTE complies with the U.S. trade laws.
ZTE has become a critical part of the broader discussions between China and the U.S., the two largest economies in the world, over trade tensions and whether the two countries can prevent a trade war that could involve billions of dollars' worth of tariffs.
ZTE could not be reached for comment by either Reuters or the Post.
According to Reuters, the company has agreed to pay a total of $1.7 billion in penalties in a settlement with the Commerce Department. Furthermore the company will have to completely clean house on its executive team and board of directors, replacing all of the members in both of those groups. "They will pay for those people, but the people will report to the new chairman".
ZTE has pledged to fire four senior employees and discipline 35 others as a result of the guilty verdict it received in a Texas court where one of its subsidiaries are based.
"By letting ZTE off the hook, the president who roared like a lion is governing like a lamb when it comes to China", the New York Democrat said on Twitter. They will simply monitor the compliance of the company with the USA export control laws. At the same time, it continued to ask the USA government to lift the ban.
US lawmakers have repeatedly warned the administration not to go easy on a company that brazenly violated USA sanctions against two rogue nations that were pursuing nuclear weapons production.
Update: As of June 7th, ZTE and the USA government have officially reached a deal which will enable the Chinese manufacturer to stay in business.
US Commerce Secretary Wilbur Ross defended the new agreement, saying in a statement: "We will closely monitor ZTE's behavior".
The announcement boosted shares in USA component makers including Acacia Communications, Oclaro and Lumentum Holdings.