President Trump confirmed the new guidelines for the ZTE deal criticizing New York Senator Chuck Schumer as well as the previous Obama administration in a tweet Friday evening, for their deal with ZTE.
"Senator Schumer and Obama Administration let phone company ZTE flourish with no security checks," he wrote. "I closed it down then let it reopen with high level security guarantees, change of management and board, must purchase U.S. parts and pay a $1.3 Billion fine. Dems do nothing but complain and obstruct. They made only bad deals (Iran) and their so-called Trade Deals are the laughing stock of the world!"
President Trump wants to maintain leverage with China and has decided to reverse his decision on the ZTE ban, but has outlined new strict guidelines:
* $1.3 Billion fine for violating sanctions with Iran and North Korea
* New Security Rules
* American Compliance Officers
* New Board of Directors
In mid-April 2018 The Department of Commerce announced it was placing a ban on Chinese multinational telecommunications company ZTE including forbidding US companies from supplying equipment and service contracts for seven years.
ZTE is based out of Shenzhen, Guangdong, China and is the fourth largest smartphone maker in the world. ZTE relies on US companies to provide more than a quarter of the components used in ZTE telecom equipment.
The ban was a result of ZTE violating sanctions with Iran and North Korea and lying to the department’s Bureau of Industry and Security. Not only that, but instead of disciplining ZTE executives they were actually given bonuses for their illegal conduct.
So why would Trump all of a sudden want to turn around and grant concessions to ZTE when it had proven to be a bad actor? Not only did this seem to be a direct request from Chinese President Xi Jinping, but American companies--such as Qualcomm and Acacia--had reached out stressing that this would put a huge strain on their companies, since so many of ZTE’s parts come from the US. China spent $2.34 billion on parts and equipment manufactured in the US last year alone.
In directing the Commerce Department to re-examine ZTE’s penalty, President Trump encountered an intense pushback from lawmakers as well as some of Trump’s national security advisers.
In a statement on Friday Senator Chuck Schumer of New York said,
"If the administration goes through with the reported deal, President Trump would be helping make China great again. Simply a fine and changing board members would not protect America’s economic or national security, and would be a huge victory for President Xi, and a dramatic retreat by President Trump." Schumer continued, "Both parties in Congress should come together to stop this deal in its tracks."
The usual suspects are driving home the idea that this revision is only beneficial to China, but the fact is ZTE relies on purchasing parts from American companies to stay in business.
"Yes they have a deal in mind," Senator Marco Rubio, a Florida Republican tweeted on Friday. "It is a great deal...for #ZTE & China." "Now congress will need to act," he added.
Nancy Pelosi even responded to the reversal in a tweet directed at President Trump saying, "@realDonaldTrump’s ZTE deal is a staggering betrayal of the American people."
Defense officials have stressed their concerns about the communist Chinese telecom company and its security risks of spying, hacking and overall interference using the technology.
Thursday, The Senate released a defense policy bill containing a provision requiring Trump, before making any ZTE deal, to certify with Congress that ZTE hasn’t violated U.S. law for the past year and that it is cooperating with all U.S. investigations.
The House passed its own defense policy bill banning the Pentagon from purchasing any ZTE technology. The Pentagon had already stopped the sale of phones made by Chinese competitor, Huawei, in all stores on American military bases around the world in early May, for the same security concerns--fearing espionage or other intellectual property theft. Huawei is substantially larger than ZTE and critical to China’s industrial policy plans.
According to the NYT, President Trump acknowledges that China is using North Korea as leverage stating, "President Xi could be influencing Kim Jong-un," adding "If you remember a few weeks ago, all of a sudden, out of nowhere, Kim Jong-un went to China to say hello again a second time to President Xi."
Chief editor of Global Times, (which is owned by the Chinese Communist Party), Hu Xijin stated on social media site Weibo, "No matter if the previous sanction was a card in Washington’s concerted move for a trade war on China, the newest decision is a good one."
Trump expressed his concerns for American businesses in a meeting with South Korean President Moon Jae-In earlier this week stating, "By shutting them down, we’re hurting a lot of American companies. Really good American companies."
Written by FULCRUM contributor Haley Kennington