Helping Sanctioned Chinese Company Is A 'Favor' To President Xi

Yolanda Curtis
May 23, 2018

Trump said ZTE may instead face a fine of up to $1.3 billion, new management and a new board of directors, though it was not clear whether he had the legal authority to impose new financial penalties.

According to sources familiar with the discussions, a proposed trade deal with China would lift a seven-year ban that prevents USA chipmakers and other companies from selling components to ZTE, which makes smartphones and telecommunications networking gear. The president said "too many jobs in China" had been lost, marking an about-face in his criticism of China's trade practices.

Reportedly, Xi Jinping himself took up the issue of the company with Trump who tweeted on May 13 that Xi and he were working together to give a life line to the company and that the US Commerce Department had been instructed to get it done.

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"They can pay a big price without necessarily damaging all of these American companies", Trump said. "Now we are offering same deal of fine & employee discipline?"

Trump's comments are only the latest sign of poor coordination, if not outright discord, within the USA negotiating positions in the Chinese trade dispute.

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The Trump administration isn't willing to loosen exports controls on sensitive technology, said Mnuchin on Tuesday. There's a communique between the two great countries, that's all.

The Commerce Department's review of penalties against ZTE Corp. for the violations will bear in mind any threats to American security, Mnuchin said Tuesday during a hearing before a Senate Appropriations subcommittee in Washington. I think that they're a start, but we need something'.

The countries have also agreed on the "broad outline" over the weekend of a settlement to the bank on ZTE, hoping to end a punishment that threatened to put the company out of business. He agreed to withdraw tariff threats in return for China's doing the same with its counterthreat, plus promises from Beijing to buy more US agricultural goods and liquefied natural gas.

'So no, I'm not satisfied, but we'll see what happens.

While the administration assured that any revised penalty would remain harsh, some politicians said they were considering congressional action to block a reversal.

One sanctions expert questioned whether Trump has the legal authority to impose new fines on ZTE, which agreed previous year to pay $1.19 billion, including $890 million in fines and penalties, and an additional penalty of $300 million that could still be imposed. "The objective was to make sure they abide by our sanctions program".

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"It emboldens foreign companies to play fast and loose with USA sanctions when we should be putting the fear of God into these companies, especially one that was as brazen as ZTE".

Larry Kudlow, Trump's top economic adviser, said on Sunday that management changes at ZTE would be among remedies needed before the USA would consider a reprieve.

Perhaps this unfavorable truce was the best Mr. Trump could achieve at a time when he also needs Mr. Xi's help dealing with North Korea.

"Export control items are absolutely not on the table for discussions", said Mnuchin. "We would in no way look to loosen that".

The Chinese government's top diplomat, State Councillor Wang Yi, will stop in Washington on Wednesday on his way back from Argentina to "exchange views on China-U.S. bilateral relations", China's Foreign Ministry said on Tuesday. Now a new American bill is being mooted to expand the powers of the Committee on Foreign Investment in the United States (CFIUS) to target Chinese tactics more effectively.

Mr Trump also faced accusations of quid-pro-quo after pledging to soften sanctions on ZTE just days after AFP reported a Chinese state firm would pour cash into a Trump-tied real estate venture in Indonesia.

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