Trump Extends Lifeline to Sanctioned Tech Company ZTE

Trump Extends Lifeline to Sanctioned Tech Company ZTE

Details are expectedly light, but Trump has called the US Department of Commerce into action to save the troubled telco vendor.

"Too many jobs in China lost".

ZTE, a smartphone and telecom equipment maker that does business around the world, announced last week that it has halted its main operations after the Trump administration banned American companies from selling it vital components. And the Federal Communications Commission recently moved toward prohibiting U.S. Internet providers that receive federal funds from spending them on equipment made by companies such as Huawei, another major Chinese telecom player. "Trump may have recognized that backing off on ZTE clears the path for him to claim at least a partial victory in the US-China trade dispute based on the concessions the Chinese seem prepared to offer".

ZTE denies it violated the deal and is appealing the export ban.

Victory dance? Matt Gold, an adjunct Fordham University law professor and former deputy assistant USA trade representative, said the latest problems over ZTE are unlikely to worsen relations because "the current situation is about as bad as it can get without a complete freefall". By cutting off access to US suppliers of essential components such as microchips, the ban threatens ZTE's existence, the company has said.

Chinese Vice Premier Liu He is expected to resume trade talks with the Trump administration this week, after discussions in Beijing last week yielded no agreement on a long list of USA trade demands.

Locally last week, we also saw ZTE-manufactured handsets and WiFi equipment removed from sale from Telstra stores as a result of the ban.

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"But be cool, it will all work out!" he wrote. That's a key technology battle between the US and China - and one that China has a chance to win. And he has trumpeted his efforts to safeguard even if it means creating economic strain in other countries.

"It's going to disrupt procurement, supply lines, it will affect a lot of companies in various ways", said one technology industry executive who asked to remain anonymous.

"This is a fascinating development in a highly unusual case that has gone from a sanctions and export control case to a geopolitical one", said Washington lawyer Douglas Jacobson, who represents some of ZTE's suppliers.

Which brings us back to Trump.

"Our intelligence agencies have warned that ZTE technology and phones pose a major cyber security threat".

FILE PHOTO: A ZTE smart phone is pictured in this illustration taken April 17, 2018. Last week, Telstra said it would stop sales of ZTE smartphones, though it indicated it was "hopeful that ZTE will be able to reach a resolution to this matter soon so that we can recommence selling Telstra-branded ZTE devices". Oclaro, which earned 18 percent of its fiscal 2017 revenue from ZTE, fell 17 percent.

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