President Donald Trump is reportedly intervening on behalf of a Chinese company crippled by the Department of Commerce to protect American agriculture, according to Chinese and American officials briefed on negotiations.
The U.S. and China are close to making a deal that will give the embattled Chinese telecommunications company Zhongxing Telecommunications Equipment (ZTE) a reprieve from Department of Commerce penalties in exchange for the removal of tariffs on American agricultural products, The Wall Street Journal reported Monday. The report was apparently confirmed by Reuters as well.
Were the U.S. government to lift the seven-year ban on component sales to ZTE imposed last month in response to serious sanctions violations and false statements in the relevant settlement talks, the Chinese government would agree to withdraw tariffs on U.S. farm products, such as soybeans and pork, imposed in the aftermath of a U.S. decision to slap tariffs on Chinese aluminum and steel products.
Shenzhen-based ZTE was heavily fined in March of last year for illegally selling products equipped with U.S. components to Iran and North Korea, but the Department of Commerce decided to take additional punitive measures after evidence came to light that the company had misled the American government.
The problematic Chinese company is also on the radar of U.S. intelligence agencies, which are concerned about its potential to engage in espionage on American soil. Under the tough pressure from the U.S. government, ZTE has apparently halted its major operations, putting thousands of Chinese jobs on the line.
The White House revealed Monday that the Chinese government, which values ZTE as a critical company in a major industry, has brought the ZTE issue numerous times in trade negotiations with the U.S.
On Sunday, the president shocked many observers with a tweet expressing an interest in saving ZTE and getting the company back in business. (RELATED: Trump Says He’s Working With Beijing To Get A Troublesome Chinese Company ‘Back Into Business’)
President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!
— Donald J. Trump (@realDonaldTrump) May 13, 2018
China and the United States are working well together on trade, but 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. But be cool, it will all work out!
— Donald J. Trump (@realDonaldTrump) May 13, 2018
The president signaled Monday that he also concerned about the impact of the Department of Commerce ban on the export of American components, explaining that ZTE buys a lot of American-made parts.
ZTE, the large Chinese phone company, buys a big percentage of individual parts from U.S. companies. This is also reflective of the larger trade deal we are negotiating with China and my personal relationship with President Xi.
— Donald J. Trump (@realDonaldTrump) May 14, 2018
It is unclear if a deal will be reached, but some China watchers are already expressing concerns, noting that caving on ZTE is giving Beijing that which it desperately desires in exchange for the status quo. There is the possibility that much more is on the table, though. China’s top economic adviser Liu He will be visiting Washington, DC in the coming weeks for negotiations with American trade officials.
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