(Bloomberg) -- China and the U.S. have agreed on the “broad outline” of a settlement to the seven-year ban on ZTE Corp. buying American technology, ending a punishment that threatened to put the company out of business, the Wall Street Journal reported.
The details are still being worked out but would include major changes to management, the board and potentially significant fines, the newspaper said Tuesday, citing unidentified people familiar with the matter. Larry Kudlow, President Donald Trump’s top economic adviser, said on the weekend that similar measures would be needed before the U.S. would consider a reprieve.
ZTE has been forced to halt major operations after the U.S. slapped a ban on China’s second-largest maker of phone networking equipment for violating a settlement on breaching sanctions and then lying about it. Last week, Trump posted a tweet saying he was working with Chinese President Xi Jinping to help ZTE “get back into business, fast.”
While ZTE was being punished over the sales to Iran, the ban has become entwined in the trade dispute between the U.S. and China. The Shenzhen, China-based company, which employs about 75,000 people, depends on U.S. components, such as chips from Qualcomm Inc., to build its smartphones.
ZTE Suppliers Climb as China, U.S. Are Said to Resolve Dispute
ZTE ran into trouble in 2016 for violating U.S. laws restricting the sale of American technology to Iran. An 2017 agreement called for it to pay as much as $1.2 billion and penalize the workers involved, in what was the largest criminal fine for the U.S. Justice Department in an export control or sanctions case.
But in April, the Commerce Department said ZTE instead paid full bonuses to employees who engaged in the illegal conduct, failed to issue letters of reprimand and lied about the practices to U.S. authorities. That led to the seven-year ban.
ZTE’s shares have been suspended from trade in Shenzhen and Hong Kong since then.
©2018 Bloomberg L.P.
With assistance from Editorial Board