U.S., China working on deal to save ZTE
Beijing reduces tariffs on autos
WASHINGTON -President Donald Trump is moving closer to freeing the embattled Chinese company ZTE Corp. from severe penalties over export law violations, with his advisers reaching the outline of an agreement with leaders in Beijing, according to two people familiar with the discussions.
Chinese President Xi Jinping asked Mr. Trump to help the company, and Mr. Trump said his administration is reconsidering the penalties as a personal favor to the leader. The U.S. president said the deal might require ZTE to revamp its board and pay a fine of $1 billion or more.
But the speed at which Mr. Trump is working to cut this deal has drawn loud protests from a number of lawmakers in both parties. Some have warned that Mr. Trump is capitulating without getting any concrete concessions from the Chinese and setting a dangerous precedent by meddling in a law enforcement matter.
Under the broad outlines of the deal, which hasn’t been finalized, the Commerce Department would lift its recent ban that prohibits U.S. companies from selling material to ZTE, China’s secondlargest telecommunications firm. The Commerce Department could instead replace that ban with new fines or other requirements. These specifics have not been finalized.
“The objective was not to put ZTE out of business,” Treasury Secretary Steven Mnuchin told a Senate subcommittee Tuesday. “The objective was to make sure they abide by our sanctions programs.”
The people familiar with the agreement outline warned that talks between U.S. and Chinese leaders remain fluid and have already been marred by false starts and missteps. But amid reports of the bargaining, the Chinese government Tuesday made a conciliatory gesture when it said it was reducing its tariffs on imported cars to 15 percent from 25 percent effective July 1, meeting a longstanding U.S. demand.
Some analysts said the president was abandoning his goal of a comprehensive overhaul in the U.S.-China trading relationship in return for minor Chinese commitments.
“The administration has done an about-face in its approach on trade with China,” said Scott Kennedy, an expert on Chinese business at the Center for Strategic and International Studies. “… China has been let off the hook, and although ‘reforms’ are coming, they are likely to be modest, gradual and incremental. All the while, the party-state will continue to fullydraw on all of its industrial policy tools to promote Chinese national championsat home and abroad.”
ZTE is partly owned by the Chinese government. In 2017, it pleaded guilty to criminal charges related to illegally shipping to Iran telecom equipment that contained U.S. parts. The company also settled civil charges with the Commerce and Treasury departments, agreeing to pay a combined fine of $1.19 billion and be subject to a court-appointed monitor for three years.