Wilbur Ross Says U.S. and ZTE Have Reached an Agreement

The U.S. has reached a deal that will throw a lifeline to the controversial Chinese telecom company ZTE, allowing it to revive its business after paying a massive fine and submitting to management changes demanded by the U.S. government, Commerce Secretary Wilbur Ross said in an interview Thursday on CNBC.

ZTE will pay a $1.4 billion fine, according to Ross. That’s in addition to the $1 billion fine paid a year ago.

“We still retain the power to shut them down again,” Ross said.

The company must also replace its entire management team and its board of directors, according to Ross. It will be required to put $400 million in escrow, which it would forfeit if it violates U.S. sanctions on Iran or North Korea again. In addition, the company will accept U.S. compliance officers to monitor its activities, according to Ross.

“It imposes the most strict compliance that we’ve ever had on any company, American or foreign. We are literally embedding a compliance department of our choosing inside the company,” Ross said.

This week there were several reports that the U.S. and China had reached the broad outlines of a deal during Ross’s recent trip to Beijing. Larry Kudlow on Wednesday, however, said no deal had yet been finally agreed.

Ross said the deal was finalized at 6 a.m. on Thursday morning in a 23-page agreement.

U.S. policymakers say they were caught off guard when ZTE announced it was shutting down its operations as a result of U.S. sanctions on the company that barred it for a seven-year period from buying hardware or software made by U.S. companies. They claim they underestimated how important U.S. technology was to ZTE’s products.

“We did not understand that the ban on U.S. components was a death sentence for ZTE. So this change is appropriate to bring the punishment back in line with what was originally intended,” as U.S. official told Breitbart News.

The administration has insisted that talks with ZTE deal are separate from larger trade dispute between the U.S. and China, a position reiterated by Ross on Thursday. Nonetheless, Chinese trade officials have made reaching a deal on ZTE a major priority and news of the agreement may ease some of the tensions between the two countries.