ZTE pays $1 billion to US government in hopes of lifting trade ban

ZTE pays $1 billion to US government in hopes of lifting trade ban

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Following the on-going battle between the US Government and ZTE, the Shenzhen-based phone manufacturer has paid a $1 billion fine to the US government in the hopes of having its trade ban lifted, according to a report from CNN. This comes after the company signed an agreement with the US Government only to have the Senate vote to block it. The terms of the agreement meant that ZTE would pay a $1 billion fine and then put an additional $400 million in escrow, should the company violate the terms of agreement again. A statement was issued by Commerce Secretary Wilbur Ross when the deal was first announced before the Senate blocked it. ZTE paid the fine anyways to show that it has an incentive to change.

“We think this settlement, which brought the company, a $17 billion company, to its knees, more or less put them out of business … should serve as a very strong deterrent not only for them but for other potential bad actors,” said Ross.

While most US lawmakers – Republicans and Democrats alike – have been against the lifting of the ban against ZTE, US President Donald Trump has tried to convince a number of others to lift the ban. Should the US continue to block trade with ZTE, then that would render the company which employs 75,000 dead in the water. While they could in theory import chips from other manufacturers, the legality of them operating with an Android license could be problematic. While in theory, both houses of Congress could vote to lift the ban, should they vote to reinstate the ban it’s very likely that will kill any chances ZTE has of getting back in business.

But the only problem isn’t that ZTE violated trade deals, it’s that the US Government sees them as a potential security risk. We already saw earlier this year that the US Government blocked officially employed contractors from using their devices (or Huawei’s). With the company already being seen as a security risk in this manner, it’ll be even more difficult for them to get their ban lifted in the US. ZTE’s future is incredibly uncertain, and while things looked on the up, once again things are looking bleak for the company.

Source: CNN