President Trump has proposed a deal for ZTE that would involve the company paying another big fine and reshuffling its management. However, such a deal would be dependent on broader trade concessions with China and could be opposed by Congress.
The deal would un-do the the seven-year ban on US companies trading with ZTE, implemented in April after the company violated the terms of an earlier settlement for busting United Nations sanctions on Iran and North Korea.
ZTE sources many of its most important parts from US companies, and its stocks have already pretty much run out, putting the future of the company at risk. The company recently suspended operations as a result.
The US government has also made veiled references to the company’s technology potentially facilitating spying by the Chinese government.
However, President Trump has already suggested that there could be a deal to be done, although it could still be punishing for ZTE.
According to reports, Trump wants a complete management overhaul at ZTE and a $1.3bn ‘fine’ paid to lift the restrictions, which bar the company from buying parts made by US companies.
Congress, though, appears to be united against Trump on the issue, with both sides of the house wanting to see the ZTE ban remain in place.
In return for allowing ZTE to resume operations, the US government would back down on tariffs regarding agriculture and expect China to buy more milk, meat and other produce from US farmers and companies.
In some respects, ZTE has been caught in the crossfire of rising trade tension between the US and China, while the US is also pushing for China to take a harder line on its close ally North Korea.
Trump has already met President Xi of China for trade talks but has been unsatisfied with the results. Meanwhile, the Senate has voted overwhelmingly to stop Trump reversing the sanctions unilaterally.
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