China and U.S. discuss settlement over ZTE ban
May 29, 2018 Category China News Round-up, Weekly
China and the U.S. are discussing the “broad outline” of a settlement to the seven-year ban on ZTE buying American technology, ending a punishment that threatened to put the company out of business. The details are still being worked out but would include major changes to management, the board of directors and potentially significant fines, the Wall Street Journal reported. The Senate Banking Committee however, overwhelmingly supported an amendment to block the removal of penalties on ZTE unless President Trump certifies to Congress that ZTE was complying with U.S. law. Trump said he would “envision” a revised penalty for the company including a requirement that it appoint a new board of directors and a “very large fine” of perhaps USD1.3 billion.
ZTE has been forced to halt major operations after the U.S. slapped a ban on the company for violating a settlement on breaching sanctions and then lying about it. While ZTE was being punished over the sales to Iran, the ban has become entwined in the trade dispute between the U.S. and China. The Shenzhen-based company, which employs about 75,000 people, depends on U.S. components, such as chips from Qualcomm, to build its smartphones.
U.S. Commerce Secretary Wilbur Ross announced that the White House was considering options other than placing crippling penalties on ZTE after the House of Representatives passed a bill to punish the company in the new annual defense policy bill. The U.S. is considering a plan to require compliance officers to be installed at ZTE, who would “report back to the Department of Commerce. The bill must still be passed by the Senate and signed by U.S. President Donald Trump before coming into force.
U.S. President Donald Trump also claimed that China agreed to buy “massive amounts” of American agricultural products – “practically as much as our farmers can produce” – as well as reducing trade barriers and tariffs, but details of the agreement are still murky. China confirmed it had agreed to “substantially reduce” America’s trade deficit but denied the reduction would be by USD200 billion. U.S. Commerce Secretary Wilbur Ross is continuing negotiations this week in Beijing. Chinese Vice Premier Liu He said the biggest outcome of the talks was that the two sides had reached a consensus not to start a trade war. But U.S. Treasury Secretary Steven Mnuchin said the U.S. expected American agricultural exports to China to rise by between 35% and 40% this year and energy purchases to double over the next three to five years.
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