June 7 (UPI) — U.S. Commerce Secretary Wilbur Ross said Thursday the United States has reached a settlement with Chinese telecom giant ZTE over trade restrictions that have severely crimped the company’s cash flow.
Ross told CNBC the deal includes a $1 billion penalty against ZTE and the addition of a U.S.-chosen compliance team to monitor the company.
“This is a pretty strict settlement,” he said. “The strictest and largest settlement fine that has ever been brought by the Commerce Department against any violator of export controls.”
President Donald Trump’s commerce chief said he’s “very pleased with the deal,” under which ZTE will put $400 million in escrow as collateral against potential future violations. Ross said the agreement was reached Thursday morning.
ZTE, China’s second-largest telecommunications firm and the fourth-largest seller of smartphones in the United States, halted most of its operations last month after the Trump administration blocked U.S. firms from selling or providing services to the telecom giant.
ZTE devices were also barred, with those made by Huawei, from U.S. military installations around the world over security concerns.
The department’s deal comes after Trump vowed to help ZTE get back in business and ordered Ross to find a way to allow the company to operate after the trade ban cut into its revenue.
Under the deal, ZTE will also change its board of directors and executive team within 30 days.