U.S. Senate rebukes Trump, reimposes sanctions on ZTE

The Beijing research and development center of ZTE Corp. shown last week

The Beijing research and development center of ZTE Corp. shown last week

At Trump's urging, the Shenzhen-based group and the US Commerce Department reached an agreement on June 7 to have the ban lifted after ZTE agreed to pay a $1.4 billion fine.

The measure also includes an amendment to bar the U.S. military from providing aerial refueling support for the Saudi-led coalition in Yemen unless U.S. Secretary of State Mike Pompeo certifies that Saudi Arabia is taking urgent steps to end the civil war in Yemen, ease the humanitarian crisis there and reduce the risk to civilians. President Donald Trump ordered the Commerce Department to revisit the issue following talks with Chinese President Xi Jingping.

In Hong Kong, the Hang Seng Index fell over 800 points, or 2.8 per cent, and the Shanghai Composite Index closed 3.8 per cent lower.

With around 30 percent of the components in ZTE products coming from USA businesses, including Qualcomm, Intel, and Microsoft, the ban led to it ceasing "major operating activities" one month later.

The company is finalising the arrangement about where to set up an escrow account and who will be responsible for the US$400 million slotted as payments for any future violations, the people said.

But the USA ban has threatened to kill off ZTE since up to 30% of its components, such as semiconductors, come from U.S. suppliers. For failing to follow through with parts of the agreement, U.S. companies were prohibited from selling to ZTE for seven years. None of the four companies responded immediately for comment.

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The escalating conflict in the United States adds to uncertainty for ZTE as well as to its U.S. suppliers.

The amendments were brought in by a mixture of both Republican and Democrat Senators, and it would see the reintroduction of tough penalties on ZTE.

"We're heartened that both parties made it clear that protecting American jobs and national security must come first when making deals with countries like China, which has a history of having little regard for either", said the statement.

"We've articulated our desire to better educate members about the ZTE action by Commerce, and we expect to address it in conference", White House legislative liaison Marc Short said last week."We think we can fix it in conference", Short added, referring to the process when differences in House and Senate bills are reconciled.

The National Defense Authorization Act cleared the Senate 85-10, after the House of Representatives passed a similar bill on May 24. But Trump tweeted that he wanted to help ZTE "get back into business". Trump is expected to meet powerful Republican lawmakers over ZTE on Wednesday-and has also taken a tough stance on China this week on trade, threatening $200 billion in fresh tariffs. Trump had said the deal to save ZTE was a precursor to upcoming trade negotiations with China, its largest trading partner.

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