Senate blocks ZTE deal in rebuke of Trump deal

Senate blocks ZTE deal in rebuke of Trump deal

Senate blocks ZTE deal in rebuke of Trump deal

Among other things, it would restore penalties on ZTE for violating US export controls and bar USA government agencies from purchasing or leasing equipment or services from the Chinese company.

The U.S. slapped sanctions on ZTE in 2016, prohibiting the company from doing business in the U.S. for seven years, when it violated U.S. sanctions against Iran and North Korea.

It would also ban US government agencies from purchasing any devices or services from ZTE or Huawei, another major Chinese telecom firm, or using government loans to subsidize any subsidiaries or affiliates of the two companies.

The president's deal with ZTE would have forced the company to pay a $1 billion penalty, reorganize its company and allow USA compliance officers in exchange for being able to sell its products inside the U.S.

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Commerce Secretary Wilbur Ross last week announced the US reached a deal with ZTE that includes a record fine, changes to the company's board and management and USA compliance officers.

The quick action to stop Trump from rolling back the ZTE penalties shows the seriousness of the issue, Senator Minority Leader Chuck Schumer said in a statement.

ZTE has more than a dozen senior vice presidents, which is a level below executive vice president, said the company source who declined to be identified as they were not authorized to speak to the media.

Under orders from Mr. Trump, the Commerce Department last week weakened penalties on ZTE, reducing a near-death sentence to a $1 billion fine and continued oversight.

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"The compliance monitor will be on the same level as ZTE's CEO and board on compliance matters".

The Hong Kong-listed shares of ZTE slid as much as 41 per cent to HK$14.98, their lowest in a year, following a two-month trading suspension. Its Shenzhen stock slid by the daily maximum of 10%. 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.

The case has become a focus of bargaining talks as Washington and Beijing look to avert a trade war. "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".

ZTE, with a market value of about $20-billion before its shares were suspended in April, is the world's No. 4 telecom equipment maker after Huawei Technologies, Ericsson and Nokia.

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