The US and China have reached an agreement concerning Chinese telecom giant ZTE, Commerce Secretary Wilbur Ross told CNBC.
"At about 6 a.m. this morning, we executed a definitive agreement with ZTE. And that brings to a conclusion this phase of the development with them," Ross told CSNBC.
The deal includes a $1 billion penalty against ZTE and a US-chosen compliance department to be embedded into the company.
"We are literally embedding a compliance department of our choosing into the company to monitor it going forward. They will pay for those people but the people will report to the new chairman," Ross stated.
He noted that if the company does violate it again, in addition to the billion dollars they are paying the US up front, it would have "to put $400 million into escrow."
"The total deal is $1.4 billion. That money will be forfeited if they violate anything… and we still retain the power to shut them down again," Ross said.
In April, Washington prohibited ZTE from buying parts from US companies, including Qualcomm, Corning and Google.
Zhongxing Telecommunications Equipment (ZTE) Corporation is a Chinese company headquartered in Shenzhen, Guangdong, China.