Senate may deal Trump trade defeat on ZTE

Senators Move To Reverse Trump's Deal Lifting Sanctions On China's ZTE

Senate sets vote to make the export ban against ZTE the law of the land

Days after the Trump administration agreed to restore Chinese telecom firm ZTE's access to its US parts suppliers, a bipartisan group moved to block the deal.

A ZTE smart phone is pictured in this illustration taken April 17, 2018. For days, senators have scrambled to block the deal, all as the Trump administration has scrambled to undercut those efforts.

The ban, which has prevented ZTE from buying the US components it relies on to make smartphones and other devices, will not be lifted until ZTE pays a fine and places $400 million more in an escrow account in a USA -approved bank.

President Donald Trump, however, swooped in to save ZTE after negotiating with the Chinese government. It will also have to replace its management board.

All members of its leadership at or above the senior vice president level would be removed within the 30-day period, with a commitment that they would not be re-hired, along with any executives or officers tied to the wrongdoing, it said. Reuters on Tuesday revealed that ZTE had signed a preliminary agreement with the Commerce Department.

Trading of ZTE shares in Hong Kong and Shenzhen was suspended since Washington announced in April it had banned United States companies from selling crucial hardware and software components to the company.

ZTE pleaded guilty previous year to conspiring to evade USA embargoes by selling US equipment to Iran.

Under orders from Mr. Trump, the Commerce Department last week weakened penalties on ZTE, reducing a near-death sentence to a $1 billion fine and continued oversight. Meanwhile, there's no guarantee US lawmakers won't come back with further sanctions. After 10 years, if there are no violations, the $400 million will be returned to ZTE.

The Senate added the block to the National Defense Authorization Act, a must-pass piece of legislation.

Democratic and Republican lawmakers have said they believe ZTE's sales to Iran represent particularly "dangerous" breaches of USA national security.

As part of the order, ZTE must identify in detail to the Commerce Department all Chinese government ownership and control of ZTE, including public and private shares. The coordinator will have a staff of at least six employees funded by ZTE. That choked off supply of the chips and other components it needs to make networking gear and smartphones, forcing the company to grind to a halt just weeks later.

The Senate plans to challenge President Trump's pledge to lift certain restrictions against Chinese telecom giant ZTE by including a measure in the annual defense bill that would effectively block the deal from being implemented.

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