After a shutdown of ZTE‘s operations that has lasted almost two months, the U.S. and China have come to a deal to get the Chinese telecommunications company back up and running. The U.S. had blocked exports to the company after it broke terms of a settlement for sales to North Korea and Iran, which broke sanctions, The Wall Street Journal (WSJ) reported.
With the agreement, ZTE has to pay a fine of $1 billion and let enforcement officers from the U.S. oversee its actions. The company must make changes to its board and management — and put $400 million into escrow that it would lose if it breaks the settlement’s terms. However, in return, the company will be able to go back to purchasing smartphone and telecom components from U.S. suppliers. A spokesperson for ZTE didn’t respond to WSJ’s request for comment, but Commerce Secretary Wilbur Ross said, “we still retain the power to shut them down again.”
The news comes as it was reported in May that ZTE may see losses of as much as $3.1 billion (20 billion yuan) amid a continuing ban from the U.S. government on U.S. firms supplying components and materials to the company. The estimates came from Bloomberg in May, which cited unnamed sources. Bloomberg also reported that ZTE remains “hopeful” that its home country, China, and the United States will able to strike a deal to break that ban.
Separately, Reuters also reported that President Donald Trump “floated a plan” in May to fine the Chinese tech firm and “shake up its management,” even as the Trump administration is considering scaling back some of the more severe penalties in place that have, at least in part, led to the financial impact and losses as mentioned above. Trump said that U.S. tech firms had been hurt by a Commerce Department mandate from April, stating that those firms cannot sell components to ZTE.