Published: Wed, June 13, 2018
Worldwide | By Isabel Fisher

US reveals ZTE settlement details, ban still in place

US reveals ZTE settlement details, ban still in place

In April, the US Commerce Department found ZTE had violated trade bans with North Korea and Iran.

White House trade adviser Peter Navarro said on Sunday that President Donald Trump agreed to lift the ban as a personal favour to the president of China. The terms of that deal stipulate that the company has to install a whole new set of directors, embed a US-chosen compliance department and pay a $1 billion penalty.

"The fact that a bipartisan group of senators came together this quickly is a testament to how bad the Trump administration's ZTE deal is and how we will not shy away from holding the president's feet to the fire when it comes to keeping his promise to be tough on China", Senate Democratic Leader Chuck Schumer said in a statement.

ZTE halted most of its operations in May after the Trump administration blocked U.S. firms from selling or providing services to the telecom giant, but U.S. Commerce Secretary Wilbur Ross said last week that the company and the United States had reached a deal after Trump pledged to help the company get back into business.

Senators proposed a rollback and announced Monday that this will be included as part of the new defense policy bill the chamber began debating.

Among the other senators backing the amendment are Democrats Chuck Schumer of NY and Chris Van Hollen Maryland, and Republican Marco Rubio of Florida. Tom Cotton (R) said "ZTE said they couldn't remain in business, or at least not remain anything other than a cell phone hand-held business, if the denial order from March was in effect". A bipartisan amendment has been added to the upcoming "must-pass" National Defense Authorization Act, one that would put the ban back into place. Then the full bill will have to pass, and be merged with a version that passed the House earlier this year.

ZTE (0763.HK) did not immediately respond to requests for comment on Monday.

Investors wiped about $3-billion off embattled Chinese telecommunications giant ZTE Corp's market value as it resumed trade on Wednesday after agreeing to pay up to $1.4-billion in penalties to the USA government.

"The Chinese government uses these companies for espionage and intellectual property theft, posing a direct threat to our national security and endangering the American people and our economy", said Sen.

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

Senators are looking to rein in those tariffs in the defense bill, too.

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