ZTE has entered into preliminary agreement with US to resume operations

According to Reuters news agency, Chinese smartphone maker ZTE has signed a preliminary agreement with US authorities that will allow the company to resume operations.

According to sources familiar with the deal, an agreement in principle has been signed that will allow ZTE to resume its business activities. Under the agreement, ZTE can return to business after paying a $1 billion fine and $400 million bail. The latter is intended to cover any new, future violations.

Furthermore, ZTE would replace its management and board and allow inspections. A spokesman for the US Commerce Department, the agency that monitors compliance with economic sanctions, said Tuesday that no final agreement has yet been signed by both sides. ZTE declined to comment.

In April, the US banned US companies from supplying components to ZTE. The smartphone maker was therefore forced to stop the work. The trade ban was linked to US allegations that ZTE had supplied technology to Iran and North Korea, allegedly evading US sanctions.

In the course of May, it was announced that US President Trump and Chinese President Xi Jinping are working on a plan to get ZTE operational again. The company is said to have lost at least $3.1 billion as a result of the sanctions.

However, it remains to be seen whether any agreement will hold up, given that there has been quite a bit of criticism of Trump’s apparent efforts to get ZTE back on its feet. US Congressmen from both parties believe Trump appears to be bowing to Chinese pressure and can block the deal in principle.