Trump reverses course on ZTE, citing job losses in China

The first major casualty of the China-US trade war is getting 'back into business, fast' according to the president of the United States.
Written by Chris Duckett, Contributor

Trump signs an executive order earlier this year. (Image: file photo)

United States President Donald Trump has characteristically taken to Twitter to announce that he has directed the US Department of Commerce to allow ZTE to operate again.

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"President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast," the president tweeted on Sunday, US time.

"Too many jobs in China lost. Commerce Department has been instructed to get it done!"

Trump added later on Sunday that the United States and China are working well together on trade.

"Past negotiations have been so one sided in favor of China, for so many years, that it is hard for them to make a deal that benefits both countries," he said.

"But be cool, it will all work out!"

The shift in attitude comes less than a week after ZTE said it was ceasing "major operating activities" due to export sanctions placed on it by the US government, after the Department of Commerce said ZTE lied to the Bureau of Industry and Security about disciplinary actions supposedly enforced on senior employees relating to the illegal shipments to Iran and North Korea, and paid full bonuses to employees who had engaged in illegal conduct.

"ZTE misled the Department of Commerce. Instead of reprimanding ZTE staff and senior management, ZTE rewarded them. This egregious behavior cannot be ignored," US Secretary of Commerce Wilbur Ross said in April.

The company was subsequently slapped with a ban on purchasing components and software from US manufacturers for seven years.

At the time, ZTE said the US ban would threaten the survival of the company and its partners, including some US companies.

In March 2017, ZTE had been fined $1.2 billion by the United States for directly, or through third-party distributors, shipping $32 million worth of products containing American-made equipment to Iran between 2010 and 2016 without the proper licensing.

ZTE was similarly the subject of a 2012 investigation by the FBI and US Commerce Department after allegedly setting up a network of sub-companies to illegally export Microsoft, HP, Oracle, Dell, Cisco, and Symantec products to Iran.

In February, the heads of the CIA, FBI, NSA, and the director of national intelligence to the Senate Intelligence Committee also recommended that Americans not use products from Huawei and ZTE.

"We're deeply concerned about the risks of allowing any company or entity that is beholden to foreign governments that don't share our values to gain positions of power inside our telecommunications networks," FBI Director Christopher Wray said at the time.

"That provides the capacity to exert pressure or control over our telecommunications infrastructure. It provides the capacity to maliciously modify or steal information. And it provides the capacity to conduct undetected espionage."

Last month, the UK National Cyber Security Centre reportedly sent a letter to British telcos warning of the risks of using ZTE equipment, which would create national security risks that could not be mitigated against.

Australian telco giant Telstra last week said in the wake of the ZTE export ban that it would stop selling white-labelled products from the Chinese networking behemoth.

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