Tuesday , October 16 2018

China’s ZTE to pay $1.3bn fine to reopen, says Trump

Bloomberg

President Donald Trump said the US would allow Chinese telecommunications-equipment maker ZTE Corp. to remain in business after paying a $1.3 billion fine, changing its management and board and providing “high-level security guarantees.”
In a tweet on May 27, Trump confirmed a deal that his administration had outlined for members of Congress, according to two people familiar with the matter. Lawmakers in both parties have expressed concern over his decision to soften an earlier US action against ZTE over what his commerce secretary called “egregious” violations of sanctions on Iran and North Korea.
Trump took a jab at Democrats in his tweet, saying that Senate Minority Leader Chuck Schumer and former President Barack Obama “let phone company ZTE flourish with no security checks.”
Under the deal for ZTE to resume operations, it will also hire American compliance officers to monitor its operations according to the people, who spoke on condition of anonymity.
Once ZTE complies, the Commerce Department will lift an order under which the company had been cut off from US suppliers including Qualcomm Inc., effectively shutting down its business.
A deal on ZTE has broad implications beyond the woes of the company. The US and China are engaged in high-stakes talks on steel trade and intellectual property rights under the looming threat of punitive tariffs. US-traded shares of NXP Semiconductors NV rose 4.7 percent after the announcement, as signs of better US-China relations bode well for Chinese approval of Qualcomm’s purchase of the Dutch chipmaker.
A representative for ZTE declined to respond in a text message.
China’s Ministry of Commerce didn’t immediately reply to a faxed inquiry.
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 US technology ban.
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.
“Yes they have a deal in mind. It is a great deal … for #ZTE & China,” Senator Marco Rubio, a Florida Republican, tweeted.
Schumer said that “both parties in Congress should come together to stop this deal in its tracks.”

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