Trump seeks to save Chinese jobs at ZTE ahead of trade talks

Erika Holt
May 14, 2018

Jobs in China are at risk, he said.

The US Department of Commerce issued the trade ban following its determination of a violation of terms ZTE had agreed to after it was found selling embargoed technology to Iran in 2012.

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".

Without access to such technology, the company has been forced to partially shut down. The company admitted earlier this week that it had ended its "major" business operations, due to a hardware supply ban placed on it by the U.S. The company warned in April, when the ban was first implemented, that it would "severely impact the survival and development" of ZTE.

The ban on USA sales to the firm arose from its skirting of U.S. export controls by selling to banned countries like North Korea and Iran with employees documenting how to evade American oversight.

Claire Reade, a Washington-based trade lawyer and former assistant U.S. Trade Representative for China affairs, said the ZTE ban was a shocking blow to China's leadership and may have caused more alarm in Beijing than Trump's threats to impose tariffs on $50 billion in Chinese goods.

Granting a reprieve to ZTE - a firm with over 70,000 employees, over $17 billion in annual revenue and close ties to the government - doesn't fit with the strategy to hurt China, but then Trump's administration is hardly by the book and often times seemingly pragmatic.

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The conciliatory move quickly came under fire, with critics pointing out the administration was acting to rescue a firm that United States intelligence officials considered an espionage threat.

President Trump announced he is collaborating with his Chinese counterpart Xi Jinping to come up with a rescue plan to save the vulnerable company from collapse in a tweet on Sunday.

Gold said that while the president has authority under domestic law to impose sanctions for national security reasons, such moves may violate global trade rules and laws if the actions come in the absence of war or other emergency. It may have to accept more restrictions than it would like if it wants to stay in business.

"Imagine how the United States would feel if China had the power to crush one of our major corporations and make it go out of business", Reade said.

She said Trump's tweet underscored the importance of "free, fair, balanced and mutually beneficial" relations between the United States and China on issues involving the economy, trade and investment.

On Sunday, Trump appeared to ease the rhetoric, saying the countries "are working well together on trade".

For critics worrying about a trade war between Washington and Beijing, the president added a bit of advice - "But be cool, it will all work out!"

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