By Karen Freifeld
(Reuters) - The United States signed an agreement with ZTE Corp that paves the way for the Chinese tech company to resume operations after a nearly three-month old ban on doing business with American suppliers, the U.S. Commerce Department said on Wednesday.
The ban on China's No. 2 telecommunications equipment maker will be removed once the company deposits $400 million in an escrow account, the Commerce Department said, which it can do now that Commerce officials signed an escrow agreement.
"Once ZTE has completed the $400 million escrow deposit," the Commerce Department said in a statement, it will "issue a notice lifting the denial order." ZTE did not immediately respond to a request for comment.
The escrow agreement is part of a $1.4 billion settlement ZTE reached with the U.S. Commerce Department last month to regain access to U.S. suppliers, whose components it relies on for its smart phones and networking gear.
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The escrow account gives the United States an additional $400 million if ZTE violates the settlement. ZTE paid the $1 billion fine to the U.S. Treasury last month.
Once lifted, ZTE, which employs around 80,000 people, is expected to restart major operations, which would remove a sticking point within the broader U.S.-China trade war. The reprieve for ZTE coincides with a new Trump administration threat of 10 percent tariffs on $200 billion of Chinese goods.
In its statement, the Commerce Department said the ZTE action is a law enforcement matter unrelated to broader discussions of trade policy.
(Reporting by Karen Freifeld; Editing by Cynthia Osterman)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
