Senators want to nix Trump deal to help China’s ZTE
- by Xavier Trudeau
- in Financer
- — Juil 13, 2018
The Chinese telecommunications giant has signed an agreement with the Department of Commerce that will lift the export ban - which will allow ZTE to do business with American suppliers like Qualcomm. After many suspensions, fines and a total trade ban, now the DoC has announced on Twitter that the agreement is about to be finalized.
"Once the monitor is selected and brought on board, the three-pronged compliance regime - the new 10-year suspended denial order, the $400 million escrow, and the monitor - will be in place", Commerce said in the statement. White House trade adviser Peter Navarro said last month that Trump made a decision to allow ZTE to again buy US parts and components as a personal favour to Xi to show good will for bigger efforts. Everything could have been over if ZTE had said it was some miscommunication, but the United States found out the company deliberately ignored the embargo and went ahead with Iranian deal.
ZTE representatives had met with Commerce Department officials on Monday to discuss a path forward for the deal, people familiar with the meeting said on condition of anonymity.
The company had initially paid a $1.1bn (£800m) fine and was allowed to continue buying components from USA firms, but the commerce department made a decision to impose further restrictions on ZTE in April after claiming it had not disciplined the workers who sold the equipment on to customers in the sanctioned countries, as it had agreed.
The ban would be removed once the company deposits $400 million in an escrow account, Commerce said.
The US government last week fired the opening shots of an outright trade warby placing tariffs on $34bn of Chinese goods.
The company last week received a limited one-month reprieve from the Commerce Department to maintain existing networks and equipment. The current ban could have lasted up to seven years.
A little after that, the U.S. Senate voted to reinstate the sales ban on ZTE, citing national security as their reasoning. Tom Cotton (R., Ark.), Marco Rubio (R., Fla.), Chuck Schumer (D., N.Y.) and Chris Van Hollen (D., Md.), was wrapped into a larger, must-pass defense bill that cleared the Senate in June on an 85-10 vote. He called the deal "terrible", adding that it would undermine U.S. national and economic security. He said he hopes his Republican colleagues in the House and Senate will "maintain the Senate's strong language in the defence bill".
