The ban on Chinese manufacturer, ZTE, by the United States is still on but recent reports suggest that there should soon be a way out. According to Reuters, no definite agreement has been reached for now but a preliminary agreement shows that ZTE will have to part with no less than $1.7 billion as fine for it to get back to business. Recall that the company suspended its business after the ban because about 25-30% of the components it uses for its devices come from American companies.
In this preliminary agreement, $400 million will be paid in escrow in the event of future violations and the U.S Commerce Department is expected to count the $361 million ZTE paid last year as part of a settlement agreement while $1 billion as fine. The Chinese manufacturer was banned for violating the sanctions against selling American technology to Iran. ZTE admitted that it violated the sanctions and the company was forced to make some adjustments to its hierarchy. The full 7-year ban was slammed on the company when it failed to comply completely with the hierarchy shakeup.
Now, with this preliminary agreement signed, ZTE will also have to sign the final adjusted agreement. The company is expected to restructure its board of directors and executive team in about four weeks after the agreement is signed. Also, the company will grant unlimited inspection to confirm if the U.S. components are being used as the company claims.
