January 22, 2019

Donald Trump's ZTE deal poised for Senate rollback

13 June 2018, 12:30 | Joann Bryant

Senators Move To Reverse Trump's Deal Lifting Sanctions On China's ZTE

WSJ U.S. Senate sets vote this week to legislate the

The bipartisan amendment would reimpose penalties on ZTE for violating US sanctions against exporting to Iran and North Korea that the Trump administration sought to lift in exchange for the company paying a $1 billion fine and funding an in-house compliance team of USA officials.

Trump has come under scathing criticism from members of his own party, who viewed the president's efforts to help ZTE as anathema, both economically and in terms of national security.

In its statement late Tuesday, ZTE said it will "assess the full impact" of the ban and the new deal with the USA government and disclose it in an update earnings release. It also required ZTE to change its board of directors and executive team within 30 days. The ban was imposed after the company made false statements about disciplining some executives responsible for the violations.

Confirming details of the USA deal, ZTE said late on Tuesday it would replace its board of directors and that of its import-export subsidiary ZTE Kangxun within 30 days of the June 8 order being signed by the United States.

The company is trying to speed up the process of paying the fine and has applied to the USA commerce department's Bureau of Industry and Security to open a bank account in the U.S. to deposit the US$400 million escrow payment, according to people with knowledge of the matter.

The U.S. commerce department can exercise discretion in granting exceptions. "Therefore, ZTE will most likely be able to resume operations in middle of next week". The Commerce Department ban arose from a controversy in which ZTE failed to punish employees who were involved in illegally shipping USA equipment to Iran and North Korea.

Senators plan to add a provision in the National Defense Authorization Act (NDAA), an annual defense policy bill they're expecting to pass this week, that will ban USA suppliers from selling to ZTE, reported The Wall Street Journal. The coordinator will have a staff of at least six employees funded by ZTE.

"The compliance monitor will be on the same level as ZTE's CEO and board on compliance matters".

US lawmakers have attacked Washington's agreement with ZTE and plan legislation to roll it back, citing intelligence warnings that ZTE poses a national security threat.

A separate monitor was appointed to a three-year term by a US federal court in Texas last year.

While the settlement announced Monday by the U.S. Commerce Department would allow ZTE to resume buying parts and selling products in the U.S., there was a catch. "We believe ZTE will make the payment as soon as possible (we estimate in a few days)".

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