US in deal to ease sanctions on ZTE

CHINESE FIRM’S ACCESS TO US SUPPLIERS WAS BLOCKED IN APRIL

The US has reached a deal that will allow ZTE Corp to get back in business after the Chinese telecommunications company pays a record-large fine and agrees to management changes, Commerce Secretary Wilbur Ross said.

“We still retain the power to shut them down again,” he said yesterday in an interview on CNBC.

He said the Commerce Department is fining the company $1.4 billion (Dh5.1 billion), including $400 million in escrow, on top of a $1 billion US penalty a year ago.

The US blocked ZTE’s access to US suppliers in April, saying the company violated a 2017 sanctions settlement related to trading with Iran and North Korea and then lied about the violations. The company announced it was shutting down just weeks after the ban was announced.

Ross said the US will install its “own compliance people” to monitor the company and shareholders will bring in new management and board. An agreement that allows the company to reopen was seen as a key Chinese demand as the world’s two largest economies try to avoid a trade war that could undermine global growth. The US also needs China’s help negotiating the denuclearisation of North Korea ahead of a June 12 summit between President Donald Trump and North Korea’s Kim Jong-un.

Shares in NXP Semiconductors NV rose 3.8 per cent in early trading in New York after news of the ZTE deal was announced. The deal signals that China will be more likely to approve the $43 billion acquisition of NXP by Qualcomm, a deal that has been pending for 18 months. Qualcomm rose 3.2 per cent.