Trump says he wants the Commerce Department to lift ZTE's export ban

14 May, 2018, 06:06 | Author: Kathy Ellis
  • US Bans American Companies From Selling to China's ZTE

Trump's unexpected announcement came as the two countries prepared to continue trade talks in Washington this week.

Shortly after Trump's tweet, a Democratic lawmaker questioned the move to help the Chinese company, given numerous warnings about ZTE's alleged threat to US national security.

Analysts are watching to see if Trump's conciliatory stance will help ease the tensions over trade between the USA and China.

"That move in effect put ZTE out of business, and the company announced on Friday it had halted operations because of the seven-year ban".

Trump said in a Sunday morning tweet, posted minutes after arriving at his golf course in Virginia, that he and Chinese leader Xi Jinping are working together to give ZTE "a way to get back into business, fast". Too many jobs in China lost.

Even though ZTE was probably "foolish" in not understanding the consequences of violating a Commerce Department monitoring agreement, she said the episode makes it less likely that China would make concessions on USA demands that it stop subsidizing efforts to develop its own advanced technology, she said.

The threat of expulsion and restrictions was not enough to keep ZTE honest the first time around, so what the Department of Commerce can do this time is not known for the moment.

Trump has repeatedly blasted China for what he calls unfair trade practices. Even if it is cleared, the company will struggle to sell its products in the United States of America as it's been declared too risky for government purchases.

ZTE's increasingly precarious position is exacerbating tensions between the world's two biggest economies, now involved in sensitive negotiations to try and forestall a trade war. US companies that export to China have seen their goods held up at China's ports amid tougher inspections.

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The US president also earlier this year blocked a deal that would have allowed a Singapore-based firm to acquire US chipmaker Qualcomm, claiming it would enable Huawei to set the pace the global rollout of 5G technology.

ZTE denies any wrongdoing, and said in a late April statement that the ban will "cause damages to all partners of ZTE including a large number of USA companies" since it uses chips from Qualcomm, glass from Corning, and optical components from various U.S. suppliers.

During recent trade meetings in Beijing, Chinese officials said they raised their objections to ZTE's punishment with the American delegation, which they said agreed to report them to Trump.

ZTE was also handed a seven-year suspended denial of export privileges, which the commerce department chose to activate last month after determining the company had lied about its handling of the matter. Last week, Telstra said it would stop sales of ZTE smartphones, though it indicated it was "hopeful that ZTE will be able to reach a resolution to this matter soon so that we can recommence selling Telstra-branded ZTE devices". As a result, the Trump administration barred USA firms for seven years from exporting parts to ZTE, the fourth-largest smartphone manufacturer in China, including critical microchips. Both sides had been expected to dig in for a fight over their trade imbalance at this week's talks.

"But be cool, it will all work out!" he added.

Without access to such technology, the company has been forced to partially shut down.

Commerce Secretary Wilbur Ross last month accused ZTE of misleading the Department of Commerce and warned, "This egregious behavior can not be ignored".

Even with Trump's unexpected backing, ZTE is up against it to roll back the sanctions.

"Our intelligence agencies have warned that ZTE technology and phones pose a major cyber security threat", Representative Adam Schiff, a Democrat, said on Twitter.

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