After much negotiation with the Trump Administration, Secretary of Commerce Wilbur Ross confirmed this morning that ZTE, the Chinese telecommunications giant, has agreed to a $1 billion fine.
The deal will involve ZTE paying a $1bn penalty and hiring a compliance team chosen by the US, Mr Ross told CNBC.
Though some Trump administration officials attempted to frame the ZTE sanctions as a separate national security issue, the president himself appeared to pull the discussions into the broader talks over trade.
The penalties are in addition to the $892 million in penalties ZTE already paid.
ZTE had been accused by USA officials of failing to discipline employees and misleading regulators after the company was found breaking trade embargoes against Iran and North Korea.
ZTE was fined Dollars 1.2 billion in March 2017, but in April, Washington banned the sale of crucial United States components to the firm after finding it had lied multiple times and failed to take action against employees responsible for sanctions violations. The gear maker pleaded guilty past year in federal court in Texas for conspiring to violate US sanctions to Iran.
The deal includes a $1 billion fine against ZTE plus $400 million in escrow in the event of future violations.
The telecommunications equipment maker has been on life support since a seven-year US ban was imposed in April, breaking a 2017 agreement reached after it was caught illegally shipping goods to Iran and North Korea. ZTE claimed to have stopped doing business in Iran in 2012 but secretly resumed operations there the next year. Ross had been instructed to look into easing restrictions on ZTE by President Trump, who had received a personal request from Chinese President Xi Jinping. Smaller makers of optical components, including Oclaro and Acacia, rely more heavily on ZTE's business.
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"President Trump should be aiming his trade fire at China, but instead he inexplicably aims it at allies like Canada, Mexico and Europe".
There was no immediate comment from the Chinese government on the ZTE agreement.
US goods exported to China a year ago totalled $130 billion while Chinese imports to the USA totalled $506 billion.