A ZTE building in Beijing.
Photo: AP

Chinese telecom ZTE faced almost certain death after the Department of Commerce slapped it with a seven-year ban on purchasing or using parts from US manufacturers earlier this year amid allegations it violated sanctions on North Korea and Iran. In May, the company ceased business operations—only to soon be brought back from the brink by none other than President Donald Trump, who apparently reached some kind of confusing backdoor deal to keep ZTE alive as a favor to Chinese leader Xi Jinping and to protect “jobs in China”.

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On Tuesday, Reuters reported ZTE had signed a “preliminary” deal with the Commerce Department that included a “$1 billion fine against ZTE plus $400 million in escrow to cover any future violations,” bringing the total fines paid by the company to around $1.7 billion. ZTE also allegedly agreed to allow “unfettered” site visits by US officials and replace its board and executive team. Though members of Congress who believe Chinese telecoms are a national security risk are reportedly furious about the arrangement, Reuters now reports there is pretty much nothing that they can do about it:

Lawmakers have included some restrictions on ZTE - such as a ban on the military’s use of its products—as amendments to major legislation such as the National Defense Authorization Act, or NDAA, now making their way through Congress.

But those limited restrictions would not keep Trump from relaxing the restrictions if he were determined to do so.

Sanctions laws that affect ZTE allow any president to waive them if he feels it is necessary for national security reasons. The U.S. Constitution also gives presidents broad control of foreign policy matters.

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Though the opposition to the move is bipartisan, it’s certainly not bipartisan enough for Republicans to risk a showdown with the president by passing legislation designed to bar him “from spending any money to ease restrictions on ZTE,” Reuters added—something that could push Trump towards the first veto of his presidency. The news agency added that on Wednesday, the House Homeland Security Committee voted down a motion led by their Democratic counterparts that would have released more information on why, exactly, federal officials believe ZTE poses a security risk.

In other words, while Democrats intend to raise noise about the ZTE issue, Republicans are providing the president with some cover. But there’s very little hope of Trump’s decision being reversed unless he flips his position (something that always remains a possibility with this administration).

It’s far from clear what exactly the president got out of his agreement with Xi, if anything, besides preserving a major purchaser of US-made components. But it could have also been related to ongoing talks between the US and China to avoid a trade war Trump has been threatening to start later this month by raising tariffs on $50 billion in Chinese goods. Chinese negotiators have reportedly proposed buying up to $70 billion more in US exports if Trump’s administration does not impose the tariffs, but also promised to retaliate tit-for-tat if it does.

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However, the move directly undercut Trump’s own Secretary of Commerce Wilbur Ross, who struck a hard line on ZTE amid the backdrop of the possible trade war.

Center for Strategic and International Studies analyst Chris Johnson told the Washington Post, “It was clear to me that there was a range of options between a handslap and ‘I destroy you as a company’ and Secretary Ross decided to go with ‘I destroy you as a company.’”

[Reuters]

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