The preliminary agreement which ZTE has purportedly signed is likely to face significant headwinds in the U.S. Congress since the Chinese firm has been labeled as a threat to U.S. national security. Overcoming that is likely to be a Himalayan hurdle for Trump.
According to sources familiar with the matter at hand, ZTE Corp has signed an agreement which in principle lifts the 7-year ban U.S. Commerce Department’s ban of entering into commercial relationship with U.S firms.
ZTE was caught illegally shipping goods to North Korea and Iran following which in it was slapped with the 7-year ban.
ZTE has agreed that it had devised elaborate schemes to hide its illegal activities after the U.S Commerce Department threatened to cut off its global supply chain.
On Tuesday, a spokesman for the Commerce Department stated “no definitive agreement has been signed by both parties.”
ZTE did not immediately respond to requests for comment.
According to sources, the preliminary deal ZTE has entered into includes a $1 billion fine in addition to the $400 million it has to place in escrow to cover any future violations.
Sources have preferred the cover of anonymity since they were not publicly authorized to speak on the matter.
ZTE’s survival has been a hot topic of discussion in the U.S.-China trade relations.
China has offered to import an extra $70 billion of U.S. goods a year, as a means to defuse the barbs in existing trade relations.
However, overtures by China have met with a strong resistance in the U.S. Congress, where fellow lawmakers, across parties, have accused the President of bowing to Chinese pressure.
ZTE has been labeled as a threat to U.S. national security.
“By letting ZTE off the hook, the president who roared like a lion is governing like a lamb when it comes to China,” said Chuck Schumer, a U.S. Senate Democratic leader. “Congress should move in a bipartisan fashion to block this deal right away.”
U.S. companies provide an estimated 25% to 30% of components in ZTE’s equipment, which includes telecommunications gear and components for smartphones.