Earlier this June, ZTE received a second chance to clean up its act via White House. It was a welcome change because President Donald Trump himself declared he would be helping the Chinese telecommunications company to remain open despite the Capitol Hill’s opposition. A number of lawmakers in the country have conflicting views about the punishment for ZTE’s export violations and different lies. For one, there’s Senator Marco Rubio of Florida against letting ZTE slide. Sanctions have been set and Senator Rubio does not agree with the Chinese tech giant not going through them.
You see, Rubio been saying these Chinese OEMs “spy and steal from us”. Those are such strong words but they’ve always been a subject of contention. The company reached an agreement with the U.S. Commerce Department to lift the ban. This is in relation to the issue of sourcing components from American sources.
Back in April, ZTE was sanctioned by the US government for lying about some things it was supposed to follow in North Korea and Iran. Specifically, it was told not to ship American-made components to the countries mentioned. US Department of Commerce discovered the lies and so it sent out a 7-year suspension of denial of export privileges. ZTE was banned alongside Huawei. President Trump wants to see ZTE back in business and so it asked the Commerce Department to help out ZTE. Trump is definitely serious but not without any opposition.
We don’t think ZTE would have to cease operations of main business yet. The US President simply wants to make changes. However, the Senate made a vote on the issue. The penalties of the Chinese telecom would be reinstated as opposed to the suggestion of the POTUS to help the brand. American sanctions have been violated so penalties must be followed.
There seems to be a showdown between the Executive branch and the Senate on the issue. It is said to be a rare event involving the White House and most Republican lawmakers. Trump’s request seemed to be good and innocent but that would undo the agreement between ZTE and the Commerce Department.
The Chinese company was told to pay over $1 billion in fine and then replace the senior leadership. Compliance officers would also be assigned. Majority of US lawmakers shared their objection. It appears ZTE has been saved but there is a price to pay. The penalty given would soon be signed as a law but the White House is clear about its objection. The Republican lawmakers are still expected to meet with the President to discuss the Senate provision.
We’re particularly watching how the story unfolds because it is not common for Republican lawmakers to disagree with the President. The penalties are said to add strain to the unclear relationship between China and the US as two of biggest economies in the world. ZTE is being viewed as a national security threat (like Huawei) so something must be done. The Senate bill in question actually includes a number of provisions related to labeling China and Russa as “revisionist powers and strategic competitors”, as well as, investment in research and development to compete with the weapons developments of the two countries.
Let’s wait and see for the result of the meeting between Mr. Trump and the Senators. It should be interesting.