US signs deal with ZTE, moves closer to lifting ban on Chinese firm

The Trump administration has signed an agreement with ZTE that will help the Chinese telecommunications giant move to reboot its operations, the Department of Commerce announced Wednesday.

The Chinese phone maker had shut down its operation in the U.S. after Commerce issued a ban in April on U.S. businesses selling equipment to ZTE, a punishment for the company violating U.S. sanctions against Iran.

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The agency said in a statement on Wednesday that it had signed an agreement with ZTE to lift the ban on it doing business with U.S. companies once ZTE puts a mandated $400 million in an escrow account.

The escrow agreement is a part of a $1.4 billion penalty settlement between the Commerce Department and ZTE. Should the company not meet its side of the agreement, it will forfeit the $400 million in the escrow account.

ZTE has already paid $1 billion to the agency.

“The ZTE settlement represents the toughest penalty and strictest compliance regime the Department has ever imposed in such a case,” Commerce said in a statement, adding that it expects the punishment to “deter future bad actors.”

Lifting the ban on ZTE doing business with U.S. companies is expected to help the Chinese telecom giant restart its operations, which it was forced to shut down after the original punishment for violating sanctions.

While the Trump administration has moved to ease penalties against the Chinese phone company, U.S. lawmakers on both sides of the aisle have fought to make sure that ZTE stays out of the country.

They’ve argued that ZTE and other Chinese technology firms are a threat to U.S. national security given their close ties to the Chinese government.

Lawmakers and intelligence agencies advising them worry that the companies could provide technological backdoors into sensitive data of Americans.

Last month’s must-pass defense bill included amendments to preemptively reverse the Trump administration’s efforts to ease penalties on ZTE.