Problems started to pile up for ZTE as soon as the U.S. ruling highlighted how the company had violated a sanctions agreement involving illegal exports to Iran and North Korea. However, a Commerce Department spokesman said that "no definitive agreement has been signed by both parties". He also said ZTE was "reflective of the larger trade deal we are negotiating with China and my personal relationship with President Xi".
ZTE was fined $1.2 billion in March 2017, but in April, Washington banned the sale of crucial United States components to the firm after finding it had lied multiple times and failed to take action against employees responsible for sanctions violations.
The sources requested anonymity because they were not authorized to publicly discuss the matter. The agreement is also expected to call for other concessions from ZTE, including new board members and increased US oversight of its business.
Trump tweeted last month that he told Commerce officials to find a way for ZTE to resume operations, later suggesting penalties of a $1.3 billion fine and changes to its board and top management. The report added that ZTE gets from 25 to 30 percent of the components it uses in producing smartphones and telecommunications networks from the U.S. According to Trump administration officials, ZTE gave numerous wayward executives their full 2016 bonuses and then lied about it to the U.S. government.
U.S Senate Democratic leader Chuck Shumer quipped, "By letting ZTE off the hook, the president who roared like a lion is governing like a lamb when it comes to China". "Congress should move in a bipartisan fashion to block this deal right away". Smaller makers of optical components, including Oclaro and Acacia, rely more heavily on ZTE's business.
But early this year, the USA government discovered that ZTE had not followed through on its promise. While it did fire the four employees, the company admitted to making false statements about the others, handing out full bonuses. ZTE's failure to comply with these terms triggered the suspended denial order that prohibits American companies from doing business with the Shenzhen-based company, plunging it into crisis. The company was allowed continued access to the USA market under the 2017 agreement.
Under this new agreement, ZTE will retain compliance contractor in addition to the three-year court-appointed monitor imposed by the plea agreement. The visits would verify that ZTE is using US components as they have agreed.