Trump strikes deal, saves China’s ZTE

Telcommunications giant to pay $1B fine, face more oversight

WASHINGTON — President Donald Trump handed the Chinese telecommunications firm ZTE a lifeline Thursday, agreeing to lift tough U.S. sanctions over the objections of Republican lawmakers, his defense advisers and some of his own economic officials.

The deal will help defuse tensions with the Chinese president, Xi Jinping, who personally asked Trump to intervene to save ZTE and whom the president has relied on to help pave the way for next week’s summit meeting with the North Korean leader.

The Commerce Department said ZTE had agreed to pay a $1 billion fine, replace its board and senior leadership, and allow the United States to more closely inspect the company by effectively having a handpicked compliance team embedded inside the firm. The United States would then lift a seven-year ban that prevented the company from buying U.S. products and was quickly driving it out of business.

But the settlement has inflamed lawmakers, including top Republicans, who objected to helping a Chinese company that broke U.S. law and has been accused of posing a national security threat. It also puts the United States in an awkward position as it punishes allies Canada, Mexico and the European Union with tariffs on steel and aluminum, and insists that countries in Europe and elsewhere abide by U.S. sanctions on Iran.

In 2016, the United States found the Chinese company guilty of violating U.S. sanctions on Iran and North Korea. In April, the government said ZTE had failed to take the necessary actions to rectify the issue, and had lied about its efforts, prompting the Commerce Department to implement the ban. Defense officials have also repeatedly expressed concern about the risk that ZTE’s equipment could pose to national security.

Lawmakers moved swiftly to try to scuttle the agreement as a bipartisan group of senators introduced an amendment that would automatically reinstate ZTE’s ban on purchasing U.S. products until the president certified to Congress that the company had met certain conditions.

“I assure you with 100% confidence that #ZTE is a much greater national security threat than steel from Argentina or Europe,” Sen. Marco Rubio, R-Fla., who supported the amendment, wrote on Twitter. “#VeryBadDeal.”

Sen. Mark Warner, D-Va., called the deal an “awful mistake,” adding that “Mr. Trump has done something pretty unique — he’s built a virtual unanimous bipartisan coalition.”

Commerce Secretary Wilbur Ross emphasized the toughness of the agreement, saying it was the largest such penalty ever levied by the agency’s Bureau of Industry and Security and included “unprecedented compliance measures.”

Ross and other administration officials have repeatedly insisted that ZTE is being handled as a law enforcement matter that is independent of trade negotiations. But those statements have been undercut by the president himself, who has suggested that the company is a bargaining chip in negotiations between the countries. In mid-May, the president said he was working with Xi to give ZTE a way to get back in business. Two days later, Trump described the ZTE move as part of “the larger trade deal we are negotiating with China and my personal relationship with President Xi.”