White House says ZTE 'significant' China concern

Pauline Gross
May 16, 2018

US President Trump has done a volte face on the issue of China's ZTE trade embargo.

But once you understand that Trump is primarily guided by the twin goals of affirming himself and dominating others, it becomes fairly easy to see what he'll do next.

Liu's trip to Washington will be his second to America in three months and follows the recent visit to Beijing by a USA delegation led by Treasury Secretary Steven Mnuchin, which ended without tangible achievements. The White House is increasingly preoccupied with its efforts to reach a peace deal with North Korea and avoid a trade war with China.

During the confirmation hearing, Senator Mark Warner, expressed concern over the security threat posed by Chinese telecom giant ZTE.

In response, China threatened to impose tariffs on an equal amount of United States exports, including agricultural products from Trump's political heartland.

The Wall Street Journal has reported Beijing would back away from threats to slap tariffs on US farm goods in exchange for easing the ban on selling components to ZTE.

At the Beijing talks, the Trump administration handed China a list of hard-line demands that trade experts said could make it even more hard to resolve the trade disputes. Notably, the reason for the downfall of this tech firm from China was a ban imposed by United States.

"Having noted China's great concern about the case of ZTE, the USA will listen attentively to ZTE's plea, consider the progress and efforts ZTE has made in compliance management and announce adjustment to the export ban", the document states.

ZTE agreed to paying a fine and a multi-year denial of export privileges.

ZTE announced last week the USA sanctions would force it to curtail major operations.

"Where this leads I don't know". ZTE has asked the department to suspend the seven-year ban on doing business with USA exporters.

"Tariffs are hidden, regressive taxes that will be paid by U.S. businesses and consumers, paradoxically harming U.S. competitiveness", the U.S. Chamber of Commerce, the largest business group in the country, said in its written comments submitted on Friday. The company bought 25% of the technology used in its phones from American companies.

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Last week, the company announced that it was halting operations.

And he says the president has asked Commerce Secretary Wilbur Ross to look into it "consistent with laws and regulations".

Washington lawyer Douglas Jacobson, who represents some of ZTE's suppliers, said: "This is a fascinating development in a highly unusual case that has gone from a sanctions and export control case to a geopolitical one".

"They were a little bit blindsided", said Paul Triolo, a technology specialist at the Eurasia Group consultancy.

The latest indignity for Ross is Trump's reversal of sanctions on Chinese telecom giant ZTE, which was barred on April 16th by Ross' Commerce Department from importing goods from the US, as punishment for its repeated violations of USA sanctions against North Korea and Iran.

"American workers and companies confront rampant theft of USA intellectual property, agricultural policies that disadvantage American farmers, restrictions on market access for US service providers and manufacturers, and mercantilist industrial policies that have cost USA workers their jobs", they wrote.

Shortly thereafter, the Chinese government reportedly restarted its review of the application of Qualcomm-a US telecom company-to acquire the Chinese company NXP. This is the same company that was banned from doing business in Norway in 2009 for shady procurement practices and also sold eavesdropping and spy equipment to the Iranians in 2010.

And so investors breathed a sigh of relief after Trump's tweet, buying stock Monday in Maynard, Massachusetts-based optical components maker Acacia Communications, which past year collected 30 percent of its revenue from ZTE; San Jose-based optical communications company Oclaro; and Sunnyvale, California-based fiber optic cable manufacturer Finisar.

The case goes back to before Mr Trump took office.

"This would be a truly very bad deal for the U.S", Derek Scissors, a China specialist at the conservative American Enterprise Institute, wrote in a blog post. The U.S. accused ZTE of misleading American regulators after it settled charges of violating sanctions against North Korea and Iran. JP Morgan stated that the very fact that Trump is trying to solve problems for ZTE is indicative of the warming up of connection between US and China.

China objected to ZTE's punishment at trade talks in Beijing this month, and the American delegation agreed to report their concerns to Trump.

Other reports by GizPress

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