U.S. House Passes Defense Measure That Backs ZTE Penalties

Clay Curtis
May 27, 2018

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. "Dems do nothing." ZTE will be required to pay an additional fine, instate American compliance officers, and get rid of their current board members.

The issue of chip technology is now in the spotlight after the US Department of Commerce in April banned the export of American technology components and operating systems to ZTE, one of China's biggest makers of telecommunications hardware and smartphones, for breaching the settlement terms in a violation of Iran and North Korea trade sanctions. Now it seems that the president has come up with a deal that involves the Chinese telecoms firm not only making security guarantees, but also buying components from United States companies.

Trump said earlier this week he ordered a reconsideration of penalties against ZTE as a favor to China's President Xi Jinping, as the company estimated losses of at least $3.1 billion from the USA technology ban.

ZTE was crippled following sanctions from the US.

To block such a deal, Congress would probably need to pass a law with a veto-proof majority that prohibits the Commerce Department from rolling back penalties.

Lawmakers have warned the administration not to go easy on a company that brazenly violated USA sanctions against two rogue nations that were pursuing nuclear weapons production.

Rubio's message echoes that of New York Democrat Sen.

Schumer added: "Both parties in Congress should come together to stop this deal in its tracks".

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The administration could announce the deal as early as Friday, the Times reported. Chris Van Hollen, D-Md. "President Trump should stop worrying about Chinese jobs, and start worrying more about American national security".

"Our Trade Deal with China is moving along nicely, but in the end we will probably have to use a different structure in that this will be too hard to get done and to verify results after completion", the president said in a tweet on Wednesday.

"I closed it down then let it reopen with high-level security guarantees, change of management and board, must purchase USA parts and pay a $1.3 Billion fine".

If ZTE agrees to the deal, the Commerce Department would roll back restrictions it imposed in April that prohibited USA companies from selling parts to the Chinese firm. The ban amounted to a virtual death sentence for ZTE, which relies on U.S. parts, and it also hurt ZTE's USA suppliers.

It was reported earlier this week citing sources that a proposed trade deal with China would lift the ZTE ban.

He later tweeted that the ZTE talks were "part of a larger trade deal" being negotiated with China. Without crucial hardware components, ZTE's factories and most of its 75,000 employees are sitting idle. In doing so, the two nations pulled back from the brink of a trade war over Chinese demands that United States companies hand over some of their technology as the price of doing business in China.

U.S. Commerce Secretary Wilbur Ross is scheduled to visit China next week for another round of talks.

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