The preliminary deal includes a $1 billion fine and $400 million in escrow in case of future violations. Further, the sources added that the Commerce Department plans to amend its 2017 settlement agreement and count the $361 million ZTE paid as a part of that.
In 2018, the government placed a seven-year US parts supply ban on ZTE, as it claimed the company had not yet disciplined 35 of its employees, which was a condition of the 2017 deal.
According to Reuters, ZTE has signed a preliminary agreement that will lift the ban on U.S. companies providing ZTE with goods.
Commerce Secretary Wilbur Ross banned US companies from doing business with ZTE in April, after his agency learned that ZTE had not followed through on commitments made back in 2016.
The move eases a seven-year ban on ZTE buying American parts, which Commerce levied in April.
The US had previously blocked ZTE's access to US suppliers, saying the company had violated a sanctions settlement.
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ZTE could not be reached for comment by either Reuters or the Post.
ZTE's survival has been a topic of discussion in high-level US-China trade talks.
Mr Ross emphasised that the agreement was separate from trade negotiations between the USA and China.
The report says that ZTE has signed an agreement in principle drawn up by the United States, but it has not signed anything definitive.
Trump appeared to confirm that a deal had been reached in a tweet on May 25, but subsequent broader U.S. trade talks in Beijing on U.S. tariffs on aluminum and steel ended inconclusively with no mention of the ZTE matter. The U.S. threatened sanctions, but ZTE promised to change its practices and punish the executives responsible for its misconduct. At that time, the USA discovered documents that showed how ZTE established new entities to sell US technologies to Iran. "It would also allow unfettered site visits to verify that U.S. components are being used as claimed by the company". It has a small but rising share of the smartphone business in the US.