ZTE Dives After Agreeing to $1 Billion Fine and Major Revamp

Senators Move To Reverse Trump's Deal Lifting Sanctions On China's ZTE

Senate sets vote to make the export ban against ZTE the law of the land

After it was exposed that ZTE violated US trade embargoes and directly lied to officials about the conduct, the Commerce Department banned USA exports to the company as punishment. Senators on both sides of the aisle criticized Trump for calling on the Commerce Department to reverse its position, with many saying ZTE poses a risk to United States national security.

Confirming details of the US deal, ZTE said late on Tuesday it would replace its board of directors and that of its import-export subsidiary ZTE Kangxun within 30 days of the June 8 order being signed by the United States. The U.S. export ban would be lifted in exchange for a $1 billion fine, $400 million in escrow to cover future issues, the naming of a new Board and executive team, and the installation of a U.S. selected compliance team that would be put in place at ZTE headquarters.

Sen. Cotton explained on Twitter that ZTE has extensive ties with the Chinese Communist Party and a record of doing business with North Korean and Iran. "Given their repeated violations of USA law, we can not trust them to respect USA national security, and so it's vital we hold them accountable and pass this amendment". The intelligence community suspects the company's devices are mechanisms for espionage that can be remotely tracked and used to steal intellectual property. Marco Rubio (R-Fla.), another chief backer of the amendment.

Cotton and Rubio, along with Sen. Trump's administration struck a deal with ZTE last Thursday, which allowed the company to continue buying components from the U.S., under supervision, with a $1 billion fine. The move by senators on Monday to include it in the annual must-pass defense bill came just hours before Trump meets with North Korean leader Kim Jong Un.

ZTE, which is based in Shenzhen, is China's second biggest telecoms maker.

But a bipartisan group on Capitol Hill was upset from the moment that the president first got involved.

Republican and Democratic senators who support the original ZTE punishments feel strongly that ZTE's flagrant violations deserve the ultimate punishment, and not a "slap on the wrist" fine. Among other things, it would restore penalties on ZTE for violating USA export controls and bar US government agencies from purchasing or leasing equipment or services from the Chinese company. So if the Senate measure passes, the two chambers will then have to reconcile their bills and send it to Trump to sign into law.

Legislators said they are planning to block the ZTE deal in an amendment to the National Defense Authorization Act, a big defense policy bill the Senate is due to debate this week. "I want to keep the conversation going".

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