Chinese telecommunications giant ZTE Corp. was poised to resume business with its U.S. suppliers as the last major hurdle of the deal President Donald Trump made to save the firm had been cleared.
The Commerce Department said Wednesday in a statement that it had reached an agreement with ZTE 0763, -5.59% regarding the process by which the firm would deposit $400 million into an escrow account as part of a penalty for its violations of an earlier settlement. Once ZTE deposits the money, Commerce will allow it to resume buying from the U.S. suppliers on which its business depends, the statement said.
The saga over the fate of the Chinese firm began in April when the Commerce Department banned U.S. companies from selling to ZTE as punishment for its failure to honor an earlier U.S. agreement to resolve its sanctions-busting sales to North Korea and Iran. Because ZTE relies on U.S. suppliers to make its smartphones and to build telecommunications networks, the penalty was effectively a death knell. Then on May 13, Trump tweeted that he and Chinese President Xi Jinping were “working together” to find a way to help the company get back into business.
The Commerce Department struck a new deal with ZTE on June 7 that would allow the company to resume buying from U.S. suppliers on the condition that it put the $400 million into an escrow account and pay a $1 billion fine, which it had already done. As part of the deal, ZTE also had to agree to replace its board of directors and senior leadership team and fund a team of U.S. compliance officers to monitor the company for 10 years.
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