China pledges to work seriously with USA ahead of Ross' visit

Brunilde Fioravanti
Mag 24, 2018

U.S. President Donald Trump on Tuesday floated a plan to fine ZTE Corp (000063.SZ) (0763.HK) and shake up its management as his administration considered rolling back more severe penalties that have crippled the Chinese telecommunications company.

Trump's comments come one day after he said he was "not satisfied" with the trade talks that have become stressed on the United States side by an apparent lack of coordination among administration officials. ZTE shut down most of its production after the ruling was announced.

"When I looked at it I said, you know, they could pay a big price without necessarily damaging all of these American companies, which they are because you know you're talking about tremendous amounts of money and jobs", he said.

That drew a quick response from Republicans and Democrats in Congress.

Some 26 senators, including the chamber's top Democrat, Chuck Schumer, and No. 2 Republican, John Cornyn, urged the administration in a letter to keep penalties in place for "serial and pre-meditated violators of US law, such as ZTE".

WASHINGTON-The United States and China are working toward an agreement that would ease USA sanctions that were imposed on ZTE Corp. and let the Chinese telecommunications giant stay in business.

"Sadly #China is out-negotiating the administration & winning the trade talks right now", Republican Sen. It would be added to a defense-policy bill that Congress typically passes each year.

The Commerce Department last month blocked China's ZTE from importing American components for seven years, accusing it of misleading US regulators after it last year settled charges of violating sanctions against Iran and North Korea.

In return for allowing ZTE to live, the USA government would back down on tariffs regarding agriculture and expect China to buy more milk, meat and other stuff from United States producers. U.S. Treasury Secretary Steven Mnuchin told CNBC on Monday that Ross aimed to negotiate "a framework" that could then turn into "binding agreements. between companies". The ban brought ZTE's factories to a standstill.

As Washington and Beijing prepare to move forward with a deal that would lift the sales ban on ZTE, the Chinese telco has reportedly been busy getting ready to resume the operations that were ceased due to the ban. The ban was a virtual death sentence for ZTE, which relies on US parts.

"Putting our national security at risk for minor trade concessions is the definition of short-sighted", Senate Minority Leader Chuck Schumer, D-N.Y., tweeted at Trump.

It is unclear what ZTE can do to prompt a reprieve, though it is expected to reshuffle executives and possibly its board.

Trump did not say whether a deal had been struck with China.

An agreement a year ago called for the company to pay as much as US$1.2 billion and penalize the workers involved, in what was the largest criminal fine for the US Department of Justice in an export control or sanctions case.

"The objective was not to put ZTE out of business", Mnuchin said. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. It is not a solicitation to make any exchange in commodities, securities or other financial instruments.

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