President Donald Trump signaled Sunday he would help out a Chinese phone-maker that has been banned from accessing U.S. technology, a top priority of Chinese trade negotiators coming to Washington later this week for talks.
The Commerce Department imposed the harsh penalty just last month against ZTE, one of China’s biggest tech companies, after it was found to have violated U.S. sanctions by selling equipment to Iran and North Korea.
But Trump is softening his stance toward the company as he seeks to strengthen his relationship with Chinese President Xi Jinping, a key player in the upcoming summit with North Korea at which Trump hopes to score a major foreign policy victory, according to two people familiar with his position.
“President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast,” the president wrote on Twitter. “Too many jobs in China lost. Commerce Department has been instructed to get it done!”
It was unclear exactly what Trump had in mind for ZTE, and he does not alwaysfollow through on policies floated via tweet. White House press secretary Sarah Huckabee Sanders said later on Sunday that Trump expected Commerce Secretary Wilbur Ross to “exercise his independent judgment…to resolve the regulatory action involving ZTE based on its facts.”
“The administration is in contact with China on this issue, among others in the bilateral relationship,” Sanders said in a statement.
Trump’s decision to ease up on the Chinese company came at an odd time, given that the administration also sent the message that it might go after European allies if they continue to be involved with Iran.
The president pulled the U.S. out of the Iran nuclear agreement on Tuesday and vowed to re-impose sanctions on Iran, including, possibly, secondary sanctions on companies that do business with the regime. He made no mention Sunday of ZTE’s involvement with Iran.
Later, the president repeated his frequent claim that China has taken advantage of past broader trade negotiations with the U.S.
“But be cool, it will all work out!,” Trump concluded.
Nonetheless, Democrats took Trump to task over the issue. “How about helping some American companies first?” Senate Minority Leader Chuck Schumer wrote on Twitter in response to Trump’s ZTE message.
Former White House chief strategist Steve Bannon told POLITICO Sunday that “by not letting nature take its course” regarding ZTE, Trump was giving Democrats the opportunity to “try to flank the president to the right.”
Ross in March 2017 first announced an “unprecedented” $1.19 billion penalty leveled against ZTE for violating U.S sanctions by shipping telecommunications equipment to Iran and North Korea. ZTE, which reached an agreement with the government on the charges, was further accused of lying to investigators and obstructing a probe into its actions.
“Those who flout our economic sanctions, export control laws and any trade regimes will not go unpunished,” Ross said at the time. “They will suffer the harshest of consequences.”
Last month, Commerce Department decided to trigger the harshest penalty in the agreement, which was initially suspended in 2017. The department banned American companies from buying or selling the phone-maker’s products for the next seven years.
In an April letter setting out the company’s actions, the Commerce Department said the phone-maker engaged in a “extensive conspiracy,” approved by its then-CEO to evade U.S. laws.
“As a result of the conspiracy, ZTE was able to obtain hundreds of millions of dollars in contracts with and sales from Iranian entities to ship routers, microprocessors, and servers controlled under the Regulations for national security, encryption, regional security, and/or anti-terrorism reasons to Iran,” Richard R. Majauskas, acting assistant secretary of commerce for export enforcement, wrote in the April 15 denial order letter to ZTE.
Liu He, Xi’s top economic deputy, asked Ross during recent trade talks in China for relief for ZTE but was rebuffed, according to one of the people familiar with Trump’s thinking on the topic.
According to a CNET report, ZTE is the fourth-largest phone-maker in the U.S. The company disclosed to investors Wednesday that it was shuttering its major business operations to comply with Commerce’s April order. But citing an unnamed source inside the company, CNET reported that the announcement does not mean ZTE is going away.
Majauskas wrote that beyond violating trade laws, the company lied to investigators and tried to cover up wrongdoing. Some of the charges against ZTE, were related to actions to “obstruct and delay the U.S. Government’s investigation.”
In the past, lawmakers and senior government officials have raised questions about ZTE and other Chinese telecommunications companies. Republican Sens. Tom Cotton of Arkansas and Marco Rubio of Florida, and Senate Majority Whip John Cornyn of Texas previously introduced legislation that would ban the U.S. government from using ZTE’s products and would restrict the government from doing business with companies that use ZTE.
“We’re deeply concerned about risks of allowing any company or entity that is beholden to foreign governments that don’t share our values to gain power inside our telecommunications networks,” FBI Director Christopher Wray told Cotton during a Senate Intelligence Committee hearing in February. “It is something we have to be very vigilant about.”