U.S. Commerce Department Lifts Trade Ban on China’s ZTE

Following a deal made by President Trump, the U.S. Commerce Department has given the go-ahead to Chinese telecom company ZTE to resume its commercial relations with U.S. suppliers. ZTE was told the ban would be lifted once the company placed $400 million into an escrow account and paid a $1 billion fine, part of the penalty the Department had imposed on ZTE for breaking an earlier agreement to not sell to Iran and North Korea. ZTE’s failure to make good on this agreement led the Commerce Department to ban U.S. companies from selling to the Chinese company.

The Wall Street Journal reports that the Commerce Department’s ban was “a death knell” for ZTE, which “relies on U.S. suppliers to make its smartphones and to build telecommunications networks.”

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Following the ban, Trump stepped in to work with Chinese president Xi Jinping to find a solution. The new deal to lift the ban, struck on June 7, required ZTE to “put the $400 million into an escrow account and pay a $1 billion fine, which it recently did.” ZTE also agreed to “replace its board of directors and senior leadership team and fund a team of U.S. compliance officers to monitor the company for 10 years.”

ZTE has “repeatedly violated U.S. sanctions, and U.S. intelligence officials also have long warned that its equipment could be used to spy on Americans,” leading to a “large bipartisan group in Congress” to attempt to reinstate the Commerce Department’s original ban. Senators Tom Cotton (R-Arkansas), Marco Rubio (R-Florida), Chuck Schumer (D-New York) and Chris Van Hollen (D-Maryland) inserted this provision “into a larger, must-pass defense bill that cleared the Senate in June on an 85-10 vote,” and the House “passed its own version of the legislation without the sales ban.”

Schumer stated that, “allowing ZTE to resume business is a direct betrayal of President Trump’s promise to be tough on China and protect American workers,” and Van Hollen called the deal “a giveaway,” noting that it puts “our security at risk in order to protect jobs in China.” The two legislative bodies would have to come up with a single law to avoid Trump’s veto.