Federal Government Makes Deal to Put ZTE Back in Business

The Trump administration has reportedly reached an agreement that would keep Chinese telecom equipment manufacturer ZTE in business. The deal requires that ZTE pay a major fine, make management changes, and place U.S. compliance officers at the company. ZTE had earlier announced it would cease operations after the White House banned it from buying U.S. tech components in response to ZTE violating U.S. sanctions against North Korea and Iran. The new agreement would permit ZTE to resume its business with Qualcomm and other U.S. companies.

Once ZTE meets the terms of the agreement, the U.S. Commerce Department would lift the order preventing the Chinese company from purchasing U.S. products. President Trump reportedly told Fox News that he negotiated the fine directly with Chinese President Xi Jinping.

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President Trump confirmed the deal via Twitter on Friday: “I closed it down then let it reopen with high level security guarantees, change of management and board, must purchase U.S. parts and pay a $1.3 billion fine.”

“The reported deal involving China’s second-largest telecommunications equipment maker ran into immediate resistance in Congress, where Democrats and Trump’s fellow Republicans accused him of bending to pressure from Beijing to ease up on a company that U.S. intelligence officials have suggested poses a significant risk to U.S. national security,” reports Reuters.

In response to the deal, Republican Senator Marco Rubio tweeted the following: “Yes they have a deal in mind. It is a great deal … for #ZTE & China. #China crushes U.S. companies with no mercy & they use these telecom companies to spy & steal from us.”

Democratic Senator Chuck Schumer also responded on Twitter: “If the administration goes through with this reported deal, President Trump would be helping make China great again. Would be a huge victory for President Xi, and a dramatic retreat by Pres Trump. Both parties in Congress should come together to stop this deal in its tracks.”

According to Reuters, “U.S. intelligence and U.S. law enforcement agencies have serious concerns that ZTE and other Chinese telecommunications firms use their equipment to gather intelligence on U.S. citizens.”

Related:
China Set to Approve Qualcomm-NXP Deal, a Sign of Easing Trade Tensions, The Wall Street Journal, 5/26/18