An agreement in principle is not a final agreement but is a step toward it. Commerce Department spokesman James Rockas told Reuters that "no definitive agreement has been signed by both parties". In response to this situation, the USA government made a decision to prohibit the companies of that country for seven years to purchase components of the Chinese corporation, a measure that forced ZTE to temporarily cease its activities in the cell phone sales market. ZTE reached an agreement to turn over $1.19 billion and punish executives involved in the scheme, but in April the USA determined that the company hadn't lived up to its promises.
In addition to the $1 billion penalty, the agreement requires ZTE to place $400 million in escrow to cover any future violations.
ZTE had been barred in April from buying US components after the Commerce Department said the company violated a settlement after it admitted in 2017 exporting telecoms equipment to Iran and North Korea in violation of USA regulations.
"ZTE is a state-controlled telecommunications company that poses significant espionage risks, which this agreement appears to do little to address", US Senator Mark Warner, the top Democrat on the Intelligence Committee, said in a statement.
Shares of U.S. companies that do business with ZTE rose on Thursday. The company was allowed continued access to the USA market under the 2017 agreement. Following that agreement, ZTE was found to have paid out bonuses to a number of employees instead of disciplining them as previously agreed.
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There are also some political ramifications to this deal - which are outside the scope of AnandTech's purview - but as the New York Times notes, many see this as part of a larger peace offering in ensuring a new trade deal between the U.S. and China.
"The total deal is $1.4 billion".
The probe found that ZTE had conspired to evade U.S. embargoes by buying United States components, incorporating them into ZTE equipment and illegally shipping them to Iran.
The fine comes after Donald Trump stepped in to save the company after U.S. regulators barred it from doing business in the USA, an effective death blow for the company.
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Under the new agreement, ZTE must also retain a compliance team selected by the Commerce Department for 10 years.
According to a recent CNBC article, US Secretary of Commerce Wilbur Ross has called the deal "the strictest and largest settlement fine that has ever been brought by the Commerce Department against any violator of export controls".
Washington and Beijing have reached a deal to ease sanctions that brought Chinese smartphone maker ZTE to the brink of collapse, the USA said Thursday - a possible indication of progress in fraught trade talks between the world's two largest economies. Mobi Development, which relies on ZTE for more than 45% of its business, rose as much as 10.1%.
ZTE supplier Oclaro was up 1.3 percent while Acacia Communications was down 0.6 percent.
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