ZTE could face fresh $1.3b fine, Trump says

Lawrence Kim
May 24, 2018

On Wednesday morning, President Donald Trump expressed skepticism about a potential trade deal with China, tweeting that the current framework for a deal to avoid an exchange of tariffs between the two countries may be more hard than anticipated. The bill passed the panel 25-0 and now advances to the full Senate for a vote.

The ban has threatened the viability of ZTE by cutting off access to companies that supply 25 percent to 30 percent of its components.

Trump did not say whether a deal had been struck with China.

It is unclear what ZTE can do to prompt a reprieve, though it is expected to reshuffle executives and possibly its board. "It's a matter of sending a message about how strongly we feel about national defense and about a telecommunication company and how critical that is to national infrastructure but I do not see it as a rebuke".

Trump has already met President Xi of China for trade talks but has been characteristically unsatisfied with the results.

Someone at the White House got Wolf's clear, simple message before the US negotiators got back from Beijing because on May 13 the President took to Twitter to announce yet another of his stunning reversals of USA policy. "Any changes to this will fully support the mandate of making sure our sanctions and our technology are protected". The ban was put in place after it was unveiled that ZTE exported its products, built with US-made parts, to North Korea and Iran, countries under United States embargo.

The letter went to Commerce Secretary Wilbur Ross, Treasury Secretary Steven Mnuchin, and trade Ambassador Robert Lighthizer.

The latest word is that Trump wants a complete management overhaul at ZTE and a $1.3bn "fine" paid to lift the restrictions, which bar the company from buying parts made by USA companies.

He declined to comment on what alternative remedies Commerce may be considering.

"It looks like this is going to be a case where they'll have some minor tweaks and declare a victory and move onto the next case", said Washington lawyer Douglas Jacobson, who represents ZTE suppliers. "The objective was to make sure they abide by our sanctions program".

ZTE first ran into trouble in 2016 for violating laws restricting the sale of USA technology to Iran.

That violation, the Journal went on to note, meant "In 2016 the Obama Administration banned ZTE from buying USA components, which effectively put the company out of business".

Correction: An earlier version of this article incorrectly referred to Senator Charles Schumer.

Other reports by Click Lancashire

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