Published: Sat, May 26, 2018
Global News | By Blake Casey

Trump administration reaches deal to lift ZTE ban

Trump administration reaches deal to lift ZTE ban

Commerce Department officials told Capitol Hill lawmakers that the deal would require China to pay a $1.3 billion fine, replace ZTE's board, impose national security conditions on the company's operations and require ZTE to buy components from USA companies, according to reports. The Trump administration accused the company of violating the 2017 settlement after ZTE was caught shipping U.S. components to North Korea and Iran and ordered to pay a $900 million penalty. The U.S. government would then lift the seven-year ban that prevents ZTE from buying U.S. products. The fine would come on top of the roughly $1 billion ZTE has already paid for selling equipment to North Korea and Iran in violation of USA sanctions.

"The ZTE move was very surprising", said Nathan Sheets, chief economist at PGIM Fixed Income and former undersecretary for global affairs at the Treasury Department under President Barack Obama. The Commerce Department would then lift an order preventing ZTE from buying US products. Passing such a law could be hard, but lawmakers could also pressure the administration by threatening to block any votes on Trump nominees or even unrelated trade agreements until they are satisfied.

Senate Minority Leader Chuck Schumer of NY said "both parties in Congress should come together to stop this deal in its tracks".

Senate Minority Leader Charles E. Schumer said the deal, if Mr. Trump goes through with it, "would be helping make China great again".

The ZTE talks occur after the US and China last weekend suspended plans to impose tariffs on as much as $200 billion in each other's goods, pulling back from the brink of a trade war.

The plan is already drawing fire from ZTE critics in Congress, further inflaming tensions over trade policy in a week when Republicans blasted the administration for contemplating tariffs on auto imports. US companies provide an estimated 25 percent to 30 percent of components in ZTE's equipment.

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"If President Trump won't put our security before Chinese jobs, Congress will act on a bipartisan basis to stop him".

William Evanina, the acting director of the National Counterintelligence and Security Center, said at his May 15 confirmation hearing that he would not use a ZTE phone nor recommend that anyone in a sensitive position in government use one. "Simply a fine and changing board members would not protect America's economic or national security, and would be a huge victory for President Xi, and a dramatic retreat by President Trump". Too many jobs in China lost.

"Both parties have come together today to strongly rebuke ZTE and the administration's soft approach".

In the face of congressional criticism, Mnuchin on Tuesday denied that the offering relief for ZTE in exchange for trade concessions.

Trump also has said that efforts to help ZTE are meant to be part of broader trade negotiations between the United States and China, which have sputtered in recent weeks as China has resisted USA demands.

As part of the agreements ZTE made previous year it dismissed four senior employees. John Cornyn (R-Tex.), wrote to top White House officials this week.

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