Trump urges a new 'structure' for US-China trade deal

Thursday, 24 May, 2018

ZTE Corp (中興通訊) is estimating losses of at least 20 billion yuan (US$3.1 billion) from a United States technology ban that has halted major operations as clients pull out of deals and expenses mount, people familiar with the matter said.

Sen. Chris Murphy Wednesday accused President Donald Trump of "simply making thing up" with his claims that the Federal Bureau of Investigation had infiltrated his campaign in order to "create a cloud around very bad news for him".

"Nor does it address long-standing (and increasingly vocal) complaints that many USA firms are forced to transfer technologies and cede ownership to Chinese partners in return for market access, which prompted the trade investigation into China in the first place".

According to sources familiar with the discussions, a proposed trade deal with China would lift a seven-year ban that prevents USA chipmakers and other companies from selling components to ZTE, which makes smartphones and telecommunications networking gear.

Representatives for the White House did not respond to a request for more information about the president's statement.

Shenzhen, China-based ZTE depends on United States components, such as chips from Qualcomm Inc, to build its smartphones and networking gear.

Asked about the company, he said there is no deal yet with China - but it was not clear whether he was speaking specifically about ZTE or about broader trade disputes.

It is unclear what ZTE can do to prompt a reprieve, though it is expected to reshuffle executives and possibly its board.

Those worries included fears that the uncertainty raised by USA involvement in a trade war could cause companies to postpone their plans to boost capital spending to expand and modernize their facilities.

The ban has threatened the viability of ZTE by cutting off access to companies that supply 25 percent to 30 percent of its components. "It's a matter of sending a message about how strongly we feel about national defense and about a telecommunication company and how critical that is to national infrastructure but I do not see it as a rebuke".

Cornyn said that while the meeting with Mnuchin and Ross did not include a discussion about congressional action, the fiscal 2019 defense authorization bill being considered by the Senate Armed Services Committee is the vehicle for a bipartisan measure created to strengthen the Committee on Foreign Investment in the United States (CFIUS) process.

"I think it would be a potential cataclysmic mistake for a number of reasons for the United States to withdraw our troops from South Korea", said Murphy.

VAN HOLLEN: Well, there was strong bipartisan support in the Senate just last month when the secretary of commerce imposed major penalties on ZTE not only for repeatedly violating US sanctions but then for repeatedly lying about it. Those sanctions were put in place by the U.S. Commerce Department because the company violated rules about doing business with Iran and North Korea.

"It looks like this is going to be a case where they'll have some minor tweaks and declare a victory and move onto the next case", said Washington lawyer Douglas Jacobson, who represents ZTE suppliers.

In Beijing, Commerce Ministry spokesman Gao Feng told reporters that abusing national security provisions would "undermine the multilateral trade system and disrupt the order of worldwide trade".

Trump said on Tuesday he was neither pleased nor satisfied with how the recent trade talks with China went, but added, "They're a start". The company declined to comment. "The objective was to make sure that they abide by our sanctions programs", said Mnuchin.

Trump is seeking to win a major deal with Pyongyang to denuclearize and is eyeing a June 12 summit with North Korean leader Kim Jong Un. But it then went a step further to impose a seven-year ban on USA companies buying and selling ZTE products.