After the Commerce Department last month ordered American companies to stop selling products to the Chinese telecom giant ZTE, President Donald Trump on Sunday appeared to commit to reversing that ban.
President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!
— Donald J. Trump (@realDonaldTrump) May 13, 2018
In a 2017 settlement, ZTE pleaded guilty to evading U.S. sanctions against Iran and North Korea and agreed to pay a $1.2 billion combined penalty, breaking the record for such sanction penalties.
Then, last month, the Commerce Department issued a denial order against the company, asserting that it had not properly held relevant employees accountable for the sanctions violations and that it had misled U.S. officials, therefore violating the settlement terms. As a result, American manufacturers of crucial components like microchips were barred from selling to ZTE.
“The provision of false statements to the U.S. Government, despite repeated protestations from the company that it has engaged in a sustained effort to turn the page on past misdeeds, is indicative of a company incapable of being, or unwilling to be, a reliable and trustworthy recipient of U.S.-origin goods, software, and technology,” the Commerce Department’s seven-year denial order read in part.
In response, ZTE said in a statement that “[t]he Denial Order will not only severely impact the survival and development of ZTE, but will also cause damages to all partners of ZTE including a large number of U.S. companies.”
And ZTE told investors days ago that “major operating activities of the company have ceased” as a result of the denial order, though several outlets pointed out that the full impact of the denial order was not fully known.
The Wall Street Journal noted Saturday that Chinese officials had raised the issue with a U.S. trade delegation last week.