China's ZTE Company Strikes $1 Billion Deal To Resume Business With U.S.
MARY LOUISE KELLY, HOST:
To another story now. One of China's largest telecommunications companies is back on its feet today, thanks to a deal with the U.S. government. ZTE had been facing a seven-year ban on doing business in the U.S. That's because it violated an agreement with the U.S. after it got caught evading sanctions against North Korea and Iran. Now ZTE has got to pay a $1 billion fine and submit to U.S. oversight.
In return, ZTE can once again buy parts for its phones from American companies. NPR's Dustin Dwyer has more.
DUSTIN DWYER, BYLINE: There had been word in recent days of a possible deal between ZTE and U.S. regulators. But the first official announcement came this morning from U.S. Commerce Secretary Wilbur Ross. Ross told CNBC the Chinese telecom company will pay the $1 billion fine, replace its entire management team and board and embed a new compliance department that reports to the U.S.
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WILBUR ROSS: It imposes the most strict compliance that we've ever had on any company, American or foreign.
DWYER: ZTE is not a household name in America. But it's a huge company in Asia. It reported $17 billion in sales last year. A big part of its business is in smartphones, and it relies on U.S. companies, such as Qualcomm, for the parts inside those phones. After U.S. regulators announced sanctions against ZTE in April, it wasn't clear the company could even survive.
It idled factories and halted trading of its stock on Chinese exchanges. Ross told CNBC the harsh penalties announced today send a strong signal to other potential bad actors.
SAMM SACKS: Of course they would say that because there's so much opposition right now to giving ZTE a deal.
DWYER: Samm Sacks is a senior fellow at the Center for Strategic and International Studies.
SACKS: So the punishment might be harsh in terms of a dollar amount, but they so quickly came to the table that I don't think it shows resolve on our part.
DWYER: Today's deal came less than two months after the original seven-year ban was announced and less than one month after President Trump tweeted that he wanted to help ZTE survive. Up on Capitol Hill, the reaction was swift, negative and bipartisan. Here's Democratic Senator Chris Van Hollen of Maryland.
CHRIS VAN HOLLEN: The president makes a phone call and says he cares about Chinese jobs and he wants to get ZTE, you know, back on its feet. And so he, you know, pulls some other kind of deal. That is a very bad message.
DWYER: On Twitter, Republican Senator Marco Rubio said the deal does nothing to keep the U.S. safe from corporate and national security espionage. It's not clear that Congress can do anything to stop the deal, though a bipartisan group of senators has signed on to legislation that would make it more difficult for ZTE to operate in the U.S. Meanwhile, on the business side, some U.S. companies got a boost from the announcement.
Qualcomm supplies parts for ZTE phones, and its shares rose today on the news. Dustin Dwyer, NPR News. Transcript provided by NPR, Copyright NPR.