Rubio on Trump's 'very bad' ZTE deal

Rubio on Trump's 'very bad' ZTE deal

Rubio on Trump's 'very bad' ZTE deal

The deal will involve ZTE paying a $1bn penalty and hiring a compliance team chosen by the US, Mr Ross told CNBC.

The Trump administration reached a deal to ease sanctions on Chinese tech giant ZTE, Commerce Secretary Wilbur Ross said. ZTE, the fourth-largest smartphone maker in the United States by market share, "buys a big percentage of individual parts from USA companies". This comes on top of the $361 million ZTE had already paid under the original settlement.

Commerce Secretary Wilbur Ross banned us companies from doing business with ZTE in April, after his agency learned that ZTE had not followed through on commitments made back in 2016.

ZTE's resuscitation with USA help has met strong resistance in Congress, where both Democrats and Trump's fellow Republicans have accused him of bowing to pressure from Beijing to help a company that has been labelled a threat to U.S. national security. Besides having to pay a huge fine, ZTE must also allow unrestricted visits meant to verify that United States components are being used as claimed by the company.

"We will closely monitor ZTE's behavior", Ross said in a statement.

Senate Majority Leader Charles E. Schumer called for Congress to reverse the decision, which is unlikely.

USA companies could soon be cleared to do business with China's ZTE, according to Reuters.

A ZTE spokesman couldn't be reached for comment.

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Ross also said that the company will have to replace its entire management and board of directors as part of the deal. "The Chinese public was up in arms because they believed the USA was destroying ZTE".

"The objective was not to put ZTE out of business", Treasury Secretary Steven Mnuchin said. The U.S. government has not signed the deal yet, however, ZTE has agreed to a previously drawn up deal.

The agreement also follows a reported offer by Beijing to ramp up purchases of American goods and thereby drive down the yawning trade deficit between the world's two largest economies - moving part-way towards meeting a key demand of US President Donald Trump in ongoing trade talks. The company pleaded guilty in U.S. District Court in Texas past year.

US goods exported to China a year ago totalled $130 billion while Chinese imports to the USA totalled $506 billion.

USA companies Qualcomm (QCOM) and Intel (INTC) account for 43 percent of the materials used in ZTE's Chinese-made handsets and networking equipment, according to tech research firm IDC. Building and maintaining a 5G network in the USA may create 3 million jobs and provide a $500 billion boost to GDP, according to a 2016 Accenture report. "The ZTE case was a thorn in the side for China ..."

Qualcomm Chief Executive Officer Steven Mollenkopf said on Thursday he hoped the ZTE agreement would pave the way for the NXP approval.

Oclaro shares are up 1.1%.

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