The United States and China made a deal which ended the nearly two-month shutdown of Chinese telecommunications company ZTE’s operations, according to the Commerce Department.
The deal will include a $1 billion fine with an additional $400 million placed in escrow, which ZTE will forfeit if it violates the terms of this agreement.
Under the terms of the agreement, ZTE will be required to have a team of special compliance coordinators who will monitor the company’s operations for the Commerce Department’s Bureau of Industry and Security. The team will be chosen by the BIS.
ZTE will also be required to replace its entire board of directors and senior leadership and will remain under a 10-year suspended denial order which can be activated to deny the company’s export privileges again.
“Today, BIS is imposing the largest penalty it has ever levied and requiring that ZTE adopt unprecedented compliance measures,” Secretary of Commerce Wilbur Ross said. “We will closely monitor ZTE’s behavior. If they commit any further violations, we would again be able to deny them access to U.S. technology as well as collect the additional $400 million in escrow.”
The BIS imposed the original denial order against ZTE on April 16 after the Department found that ZTE broke a March 2017 agreement by continuing to illegally ship goods to Iran and North Korea, according to CNBC. Members of Congress have protested the Commerce Department deal, asserting that ZTE continues to represent a national security risk.