Trump to Spare Chinese Telecom ZTE from Collapse

May 28, 2018, 02:31
Trump to Spare Chinese Telecom ZTE from Collapse

United States President Donald Trump on Friday said that he has struck a deal with Chinese President Xi Jinping to ease the United States sanctions imposed on Chinese telecommunications company ZTE.

Under the agreement, ZTE would oust its management team, hire American compliance officers to be placed at the firm and pay a fine.

The Commerce Department will lift a seven-year ban on ZTE's ability to buy American parts, which was imposed after the company violated USA sanctions and did business with Iran and North Korea.

Trump said he was ordering a reconsideration of penalties against ZTE as a favor to the country's president, Xi Jinping, after the company estimated losses of at least $3.1 billion from the US technology ban.

Democratic Sen. Chuck Schumer of NY criticized the reported deal: "President Trump would be helping make China great again". Chris Van Hollen, D-Md.

ZTE was banned in April from buying US technology components for seven years after allegedly breaking an agreement reached over charges that it violated USA sanctions by selling banned equipment to Iran and North Korea.

-China trade war and increased tension between the two powers, the ZTE ban is also a bargaining chip for the Trump administration's disputes with China. A deal first reported by the New York Times would allow the company to re-enter the us market after it meets certain terms such as paying a fine and hiring USA compliance officers.

"We urge you not to compromise lawful USA enforcement actions against serial and premeditated violators of USA law, such as ZTE", numerous lawmakers, including Sen.

The president's efforts to negotiate a deal with ZTE have been met with opposition from Democrats, as well as some Republicans.

On Friday evening, President Donald Trump lashed out at Democratic lawmakers and confirmed the news of the deal on Twitter. "It is a great deal. for #ZTE & China", GOP Sen. In April 2018 the Department of Commerce banned American companies from providing exports to ZTE for seven years. "Many hoped this time would be different". Also, ZTE is yet to confirm the deal. ZTE would also have to purchase a majority of its components from USA companies, which is slightly ironic, considering ZTE's reliance on US -made components got it into this situation in the first place.

ZTE looks to have been thrown a lifeline by the U.S. Government, with a deal reached to allow the company to restart operations.

Commerce Secretary Wilbur Ross plans to visit Beijing on June 2-4, and China has made saving ZTE one of its priorities. Too many jobs in China lost.

"The ZTE move was very surprising", said Nathan Sheets, chief economist at PGIM Fixed Income and former undersecretary for global affairs at the Treasury Department under President Barack Obama.

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