Trump and Xi Move To Resolve Shutdown of ZTE Corp

Glen Norman
May 15, 2018

The financial news headlines have been dominated by articles related to China in recent months.

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.

"President Trump expects [Commerce Secretary Wilbur] Ross to exercise his independent judgment, consistent with applicable laws and regulations, to resolve the regulatory action involving ZTE quickly based on its facts".

Following that move ZTE immediately suspended trading of its shares on Chinese stock markets and delayed an earnings release.

"Unilateral imposition of tariffs prior to any meaningful negotiations with China will raise charges that the United States has ignored its WTO commitments", the NFTC said in its comments submitted last week, adding additional tariffs are "extremely likely" to increase the harm to American manufacturers, service providers and consumers.

"As a result of the Denial Order, the major operating activities of the Company have ceased", ZTE said.

The widening trade dispute between the world's two biggest economies has taken a toll on both sides.

As part of this, they also entered into an agreement with the U.S. government.

Despite the US ban, the Washington Free Beacon has reported that ZTE was selling equipment to the Pentagon and Homeland Security Department.

ZTE had also signed a deal with Taiwanese semiconductor company Mediatek, but this was not enough to avoid crippling ZTE's supply chain. "The more we can work things out, the better it's going to be not just for USA and China, but for the entire world economy", he said.

DeBusk, a former Commerce Department assistant secretary for export enforcement, said Trump's announcement indicates "he is looking to accomplish his objectives on trade with China on a much larger level". "Commerce Department has been instructed to get it done!"

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

But Democratic lawmaker Adam Schiff cautioned against being too soft on the company, saying on Twitter: "Our intelligence agencies have warned that ZTE technology and phones pose a major cyber security threat".

In 2012, ZTE was caught illegally shipping hardware and software from the United States to Iran and North Korea - a violation of sanctions and an offence that was settled past year.

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