TRUMP TO ALLOW CHINA’S ZTE TO OPERATE IN US AFTER $1.3bn FINE
Under the deal, it will also hire American compliance officers to monitor its operations
President Donald Trump said the United States would allow Chinese telecommunications-equipment maker ZTE to remain in business in the US after paying a $1.3 billion fine, changing its management and board and providing “high-level security guarantees”.
In a tweet on Friday evening, Mr Trump confirmed a deal that his administration had outlined for members of Congress, according to two people familiar with the matter. Lawmakers in both parties have expressed concern over his decision to soften an earlier US action against ZTE over what his commerce secretary called “egregious” violations of sanctions on Iran and North Korea.
Mr Trump took a jab at Democrats in his tweet, saying that Senate Minority Leader Chuck Schumer and former president Barack Obama “let phone company ZTE flourish with no security checks”.
Under the deal for ZTE to resume operations, it will also hire American compliance officers to monitor its operations, according to the people, who spoke on condition of anonymity. Once ZTE complies, the Commerce Department will lift an order under which the company had been cut off from US suppliers including Qualcomm, effectively shutting down its business.
A deal on ZTE has broad implications beyond the woes of the company.
The US and China are engaged in high-stakes talks on steel trade and intellectual property rights under the looming threat of punitive tariffs. US-traded shares of NXP Semiconductors rose 4.7 per cent after the announcement, as signs of better US-China relations bode well for Chinese approval of Qualcomm’s purchase of the Dutch chip maker.
A representative for ZTE declined to respond in a text message. China’s Ministry of Commerce did not immediately reply to a faxed inquiry.
Mr Trump said earlier this week he ordered a reconsideration of penalties against ZTE as a favour to China’s President Xi Jinping, as the company estimated losses of at least $3.1bn from the US technology ban.
The plan is further inflaming tensions between the White House and Congress over trade policy in a week when Republicans blasted the administration for contemplating tariffs on auto imports.
“Yes they have a deal in mind. It is a great deal ... for #ZTE & China,” Senator Marco Rubio, a Florida Republican, tweeted on Friday. Mr Schumer said that “both parties in Congress should come together to stop this deal in its tracks.”
The Senate on Thursday released a defence policy bill containing a provision requiring Mr Trump, before making any ZTE deal, to certify with Congress that ZTE hasn’t violated US law for the past year and is co-operating with investigations.
“ZTE presents a national security threat to the United States — and nothing in this reported deal addresses that fundamental fact. If President Trump won’t put our security before Chinese jobs, Congress will act on a bipartisan basis to stop him,” said Maryland Democratic Senator Chris Van Hollen, the author of the Senate provision.
It is unclear if Congress will be able to muster veto-proof majorities needed to block the president on ZTE.
Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross held a meeting with GOP senators on Wednesday laying out the ZTE proposal. People briefed on the meeting said lawmakers were told to give the administration room to negotiate.