Trump lifeline. ZTE back from the dead after Trump reaches settlement deal for Chinese firm to resume business

ZTE has been handed a vital lifeline by US President Donald Trump after his administration reportedly reached a settlement deal with the Chinese telecommunications maker.

It comes after ZTE had announced earlier this month that “major operating activities of the company have ceased,” as a consequence of the seven year ban on US companies supplying with software and components.

The US had imposed the ban in April after it alleged the Chinese company had broken a settlement agreement with repeated false statements (regarding breaching US sanctions on Iran and North Korea), and the ban was punishment for violating the terms of the settlement agreement.

US ban

That original settlement agreement in March 2017 saw ZTE fined $1.1bn (£800m) after admitting to violating US sanctions by illegally shipping American technology to Iran and North Korea.

ZTE was also accused of lying about the punishment of staff involved in skirting the sanctions.

So the US Commerce Department’s Bureau of Industry and Security (BIS) had imposed the ban on sales by American companies to ZTE for seven years in April.

ZTE had at the time pleaded with the United States to lift the ban, and then warned that the move threatened its very survival.

Several weeks later China’s second biggest telecom equipment maker announced that had been forced to cease operations.

But then President Trump entered into the issue, and caused controversy in the United States after he tweeted a pledge to help ZTE.

“President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast,” Trump tweeted last week. “Too many jobs in China lost. Commerce Department has been instructed to get it done!”

ZTE employs about 80,000 people, mostly in China.

Trump lifeline

But now according to Reuters, citing a senior congressional aide as its source, the Trump administration has said the US government has reached a deal to put ZTE back in business.

The deal will see ZTE pay “a significant fine and makes management changes.”

President Trump appeared to confirm the deal in a tweet late on Friday. “I closed it down then let it reopen with high level security guarantees, change of management and board, must purchase US parts and pay a $1.3 Billion fine.”

But Trump’s deal with ZTE has run into immediate resistance in US Congress, where Reuters said that Democrats and Trump’s fellow Republicans are accusing the President of bending to pressure from Beijing.

They believe he should not have eased up on a company that US intelligence officials have suggested poses a significant risk to US national security.

In 2012 the US House Intelligence Committee had warned that both Huawei and ZTE posed a national security threat and recommended they were banned from the US.

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