The United States Senate has passed an amendment that reinstates the ban on Chinese telecoms concern ZTE doing business with US-based companies.
President Trump said he’d secured a reversal of the ban as a personal favour to Chinese president Xi Jinping in the hope that the show of good faith would ease trade negotiations between the two nations. ZTE was banned from dealing with US firms for flouting laws about exporting to Iran and North Korea. The ban cut ZTE off from critical component-makers like Qualcomm and led to it shuttering production lines and resellers dumping its products.
Trump's plan to have his friendship with Xi ease tensions appears not to have worked, in the short term at least, because the Trump administration today issued a statement that said “China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology” and therefore threatening tariffs on US$200bn of Chinese goods.
The threat came after Trump last week announced tariffs on $50bn of Chinese goods, sparking retaliatory tariffs on about $35bn of US-made goods from China.
All of which doesn’t look like that personal favour worked out as planned.
Back to the ZTE vote, as it saw US Senators from both sides of politics decry the removal of the ban on grounds of national security. A joint statement from senior Republican and Democratic senators read: “We’re heartened that both parties made it clear that protecting American jobs and national security must come first when making deals with countries like China, which has a history of having little regard for either. It is vital that our colleagues in the House keep this bipartisan provision in the bill as it heads towards a conference.”
And there’s the rub, because the US House of Representatives has passed a version of the same bill without the ZTE ban. Reconciling the bill may yet see ZTE given a lifeline, although the Senate vote passed 85 votes to 10 so there’s clearly not much will for a reversal.
The transcript of debate on the ZTE issue includes some quite colourful language from Democratic senator Chuck Schumer, who quoted FBI director Christopher Wray as saying companies beholden to foreign governments, and especially such companies in the telecoms caper, allow “undetected espionage” to take place.
On Trump’s ZTE deal, which saw the company fined $1bn and forced to replace its entire board, Schumer said “It is as weak as a wet noodle--fining them $1 billion.”
“They don't care. They are backed by the Chinese Government. Putting some outside observers on the board - come on. They will not know what is going on because the Chinese Government controls just about all the big companies in China. So I hope we will stop this.” ®