US Commerce Secretary Wilbur Ross announced on Thursday a deal with China’s ZTE which will have the smartphone maker pay a fine of $1 billion, and onboard an American monitoring team to bring to an end a simmering trade dispute between the US and China.
The deal also requires ZTE to change its board of directors and executive team within 30 days.
According to Ross, the deal, which was reached on Thursday will impose “the most strict compliance that we’ve ever had on any company, American or foreign.” ZTE will also put $400 million in an escrow account.
In April, the US Commerce Department practically brought ZTE to an economic standstill when it blocked American firms from selling parts or providing services to the company, which also makes telecommunications equipment.
This new agreement with the Chinese company is not popular, with accusations from some legislators who have accused President Trump of making an abrupt turn from an earlier promise to assume a tough stance on China.
“There is absolutely no good reason that ZTE should get a second chance, and this decision marks a 180-degree turn away from the president’s promise to be tough on China,” said Senator Chuck Schumer.
The President just caved on a deal with ZTE, a Chinese company that our intelligence professionals say poses a national security threat,” said Rep. Adam Schiff (D-Calif.). “Is the President so desperate for a deal — any deal — that he is willing to put Chinese jobs ahead of our national security?”
“I assure you with 100% confidence that ZTE is a much greater national security threat than steel from Argentina or Europe,” said Senator Marco Rubio.
This idea of “embedding a compliance team” at ZTE is a nice talking point, but unless the Trump Administration plans to open an FBI counter-intel field office inside the company, Beijing is about to get one heck of a deal on a backdoor into US telecom networks, said Senator Mark Warner.