Mixed signals on Commerce deal with ZTE

Press reports early today indicated that the United States and the Commerce Department were close to an agreement with China that would ease current sanctions on ZTE. However, subsequent press reports had President Trump stating that no such deal had been reached.

Press reports early today indicated that the United States and the Commerce Department were close to an agreement with China that would ease current sanctions on ZTE. However, subsequent press reports had President Trump stating that no such deal had been reached.

Reports from sources such as Reuters, The Washington Post, and TheWall Street Journal(subscription required) quoted sources that indicated a deal to amend the Denial Order that established a seven-year ban on access to U.S. technology was close. Such a deal would require ZTE to agree to new sanctions, such as changes in the company’s management team, as well as pay additional fines in exchange for regaining access to the technology the company needs to build its products. ZTE has suspended major operations as it awaits a potential resolution to its problems. The negotiations came against the backdrop of more extensive trade discussions between the U.S. and China.

The purported terms of the deal were similar to comments made this past Sunday by Larry Kudlow, director, White House National Economic Council, during an interview on ABC’s This Week program.

However, subsequent reports (including this one from CNBC) quote President Trump as saying that no such deal was in place. That said, Reuters reported that the President went on to theorize about what such a deal might look like, describing sanctions similar to those enumerated above.

But President Trump may have trouble changing the Denial Order. Congressional leaders that see any such deal as pandering to China have moved to prevent it. The Senate Banking Committee today passed an amendment designed to limit the President’s leeway in loosening restrictions of ZTE or any Chinese telecommunications company by a vote of 23-2.

“We know ZTE is a repeated and flagrant violator of U.S. laws – there’s absolutely no question of their culpability. Yet the President of the United States is fighting to protect jobs in China at a company that may be spying on Americans and has been sanctioned by our government. This is deeply troubling, regardless of your political party,” said Senator Chris Van Hollen (D-MD), who proposed the amendment. “I want to thank my colleagues on both sides of the aisle for working with me on this amendment, as well as language in the managers’ amendment putting Congress on the record in opposition to this. We must continue to work to stop the President from absolving ZTE of its many transgressions in the interest of Chinese jobs.”

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