Sun Sentinel Palm Beach Edition
Trump, China work on rescue for phone maker ZTE
Mnuchin: Deal isn’t ‘quid pro quo’ for trade relief
WASHINGTON — The United States and China are working toward an agreement that would ease U.S. sanctions that were imposed on ZTE Corp. and let the Chinese telecommunications giant stay afloat.
President Donald Trump said his administration would reconsider penalties on the company as a personal favor to Chinese President Xi Jinping.
“The president asked me to look into that,” Trump told reporters at the White House on Tuesday. He said there is no deal yet to reduce U.S. penalties that have caused the company to suspend its business, but that “you’re really hurting American companies also” by shutting down ZTE and the review is “a favor” to Xi.
Trump also said that the deal might require ZTE to revamp its board and to pay a fine of $1 billion or more.
The ZTE talks occur after the U.S. and China over the 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. China on Tuesday made a conciliatory gesture by cutting the tariff on imported vehicles to 15 percent from 25 percent, effective July 1.
In the face of congressional criticism, Treasury Secretary Steven Mnuchin on Tuesday denied that the U.S. is offering relief for ZTE in exchange for trade concessions.
“This is not a quid pro quo or anything else,” Mnuchin told a Senate Appropriations subcommittee.
The Commerce Department last month blocked China’s ZTE from importing American components for seven years, accusing it of misleading U.S. regulators after it last year settled charges of violating sanctions against Iran and North Korea. The ban was a virtual death sentence for ZTE, which relies on U.S. parts.
“The objective was not to put ZTE out of business,” Mnuchin said. “The objective was to make sure they abide by our sanctions program.”
On Capitol Hill, Republicans and Democrats alike criticized the administration for seeming to go easy on a company that had violated U.S. sanctions.
Citing media accounts
about ZTE talks, Republican Sen. Marco Rubio of Florida tweeted: “If this is true, then administration has surrendered to #China and #ZTE. Making changes to their board & a fine won’t stop them from spying and stealing from us.”
“Putting our nat’l security at risk for minor trade concessions is the definition of short-sighted,” Senate Minority Leader Chuck Schumer, D-N.Y., tweeted at Trump. “Frankly, this is exactly the type of deal you’d have called ‘weak’ or ‘the worst deal ever’ before you were @POTUS.”
Schumer continued his criticism on the Senate floor, saying that the action signals to China that “they can roll over us on issue after issue.” He added that on Friday he spoke directly to Trump for half an hour about the matter, and also to other officials.
“The president and Secretary Mnuchin, what they are doing sends a dangerous signal to businesses around the world that the United States is willing to forgive sanction violations or reduce penalties,” Schumer said. “It emboldens foreign companies to play fast and loose with U.S. sanctions when we should be putting the fear of God into these companies, especially one that was as brazen as ZTE.”
On the eve of talks last week with a Chinese trade envoy, Trump barged into the ZTE case by tweeting that he was working with Xi to put ZTE “back in business, fast” and save tens of thousands of Chinese jobs. He later tweeted that the ZTE talks were “part of a larger trade deal” being negotiated with China.
On Tuesday, Trump said a resolution of the ZTE sanctions would also help U.S. companies that supply the Chinese firm: ZTE “can pay a big price without necessarily damaging all these American companies; you’re talking about tremendous amounts of money and jobs to American companies.”