Donald Trump faces rebellion over ZTE comments

Global Business

This picture taken on May 3, 2018 shows the ZTE logo on an office building in Shanghai. Chinese telecom giant ZTE said its major operations had “ceased” following last month’s US ban on American sales of critical technology to the company, raising the possibility of its collapse. (AFP PHOTO / Johannes EISELE)

Donald Trump is facing pressure from members of his own political party over his attempts to ease up on Chinese telecom company ZTE. The U.S president has pledged to help the company as part of a plan aimed at averting a trade war with China.

Some Republican lawmakers say Trump is caving in amid ongoing concerns that Chinese technology firms threaten U.S. security.

CGTN’s Owen Fairclough reports.

President Donald Trump brought Chinese telecom giant ZTE to its knees by banning U.S. companies from supplying it with critical components as punishment for violating sanctions against Iran. Now he wants to save the company.

“What I envision is a very large fine of more than a billion dollars, could be a $1.3 billion. I envision a new management, a new board, and very, very strict security rules and I also envision that they will have to buy a big percentage of their parts and equipment from American companies,” Trump said.

Trump pledged to help ZTE as part of a deal with China to avert a trade war that threatened to harm both economies.

But, his move has triggered a rebellion of sorts in his Republican party. Senior lawmaker Marco Rubio accused the U.S. president of surrendering to Chinese pressure and allowing Beijing to “out negotiate” the Trump administration.

But, the U.S. treasury secretary insisted the government will address concerns that Chinese technology companies like ZTE are a threat to U.S. national security.

“I can’t comment on what the Commerce Department  is considering, but, I can assure you, anything they consider will take into account the very important national security issues and those will be addressed,” U.S. Treasury Secretary Steven Mnuchin said.

China has welcomed Trump’s offer, having agreed to buy more American goods as a way to remedy import-export imbalances which is at the heart of U.S. complaints.

“China and the United States have reached a consensus. Both sides will start negotiations on details of how to implement the consensus. The U.S. will send a high level delegation to China for detailed negotiations,” China’s Foreign Ministry Spokesman, Lu Kang said.

Positive language after weeks of trade tensions. But, Trump’s ZTE deal is creating fresh problems on his doorstep.  The U.S. Congress has voted for a new law making it harder for a president to modify penalties against Chinese telecoms firms.

More information from the Associated Press.

The United States and China are working toward an agreement that would ease U.S. sanctions that were imposed on ZTE Corp. and let the Chinese telecommunications giant stay in business.

U.S. President Donald Trump said Tuesday that the deal might require ZTE to revamp its board and to pay a fine of $1 billion, or more.

The ZTE talks occur after the U.S. and China over the weekend suspended plans to impose tariffs on as much as $200 billion in each other’s goods, pulling back from the brink of a trade war. China on Tuesday made a conciliatory gesture by cutting the tariff on imported vehicles to 15 percent from 25 percent, effective July 1.

In the face of congressional criticism, Treasury Secretary Steven Mnuchin on Tuesday denied that the U.S. is offering relief for ZTE in exchange for trade concessions.

“This is not a quid pro quo or anything else,” Mnuchin told a Senate Appropriations subcommittee.

The Commerce Department last month blocked China’s ZTE from importing American components for seven years, accusing it of misleading U.S. regulators after it last year settled charges of violating sanctions against Iran and North Korea. The ban was a virtual death sentence for ZTE, which relies on U.S. parts.

“The objective was not to put ZTE out of business,” Mnuchin said. “The objective was to make sure they abide by our sanctions program.”

On Capitol Hill, Republicans and Democrats alike criticized the administration for seeming to go easy on a company that had violated U.S. sanctions.

Citing media accounts about ZTE talks, Republican Sen. Marco Rubio of Florida tweeted: “If this is true, then administration has surrendered to #China and #ZTE. Making changes to their board & a fine won’t stop them from spying and stealing from us.”

“Putting our national security at risk for minor trade concessions is the definition of short-sighted,” Senate Minority Leader Chuck Schumer, D-N.Y., tweeted at Trump. “This the exactly the type of deal you’d have called ‘weak’ or ‘the worst deal ever’ before you were @POTUS.”

On the eve of talks last week with a Chinese trade envoy, Trump barged into the ZTE case by tweeting that he was working with President Xi Jinping to put ZTE “back in business, fast” and save tens of thousands of Chinese jobs. He later tweeted that the ZTE talks were “part of a larger trade deal” being negotiated with China.

On Tuesday, Trump said a resolution of the ZTE sanctions would also help U.S. companies that supply the Chinese firm: ZTE “can pay a big price without necessarily damaging all these American companies … you’re talking about tremendous amounts of money and jobs to American companies.”

Amanda DeBusk, a former Commerce Department official who chairs the international trade practice at the law firm Dechert LLP, said it’s not unusual for governments to use sanctions against foreign companies as leverage in trade negotiations. But it’s usually done behind closed doors.

“What’s different is the way it’s all been done in public, on Twitter,” she said. “It’s hanging out there for everyone to see.”

Story by Associated Press writers Paul Wiseman and Martin Crutsinger.