Donald Trump wants to use ZTE's app
After the visit of the Vice Minister of Commerce of China, Liu He, and the search of a common point to revert the commercial war, the United States is seeking along with China to reduce US sanctions on ZTE Corp. However, the Americans are demanding the restructuring of the board of directors and the payment of a fine of $ 1 billion or more. Yet, the step of reconciliation has not been exempt from criticism. Days ago Chuck Schumer, leader of the Democratic minority in the Senate, declared his dissatisfaction with Donald Trump's move to favor ZTE with the purpose of the company’s re-emerging from what would have been bankruptcy.
Last week, Trump announced he was looking for a solution to get ZTE into the market again. Trump wrote on Twitter that he expected the Chinese company to reopen its doors "very fast". He even worried about the job cuts in that company.
Since last month, ZTE has been paying fines and sanctions with the prohibition of doing any kind of business on US soil, including exporting its terminals and import businesses.
The reconciliation comes shortly after the United States and China suspended plans to impose tariffs of up to 200 billion dollars on each other's imports, avoiding, so far, a trade war. Beijing made a conciliatory action by reducing tariffs on imported vehicles from 25% to 15%, effective as on July 1.
According to Schumer, the sanctions against Chinese technology companies and the protection of US intellectual property are one of the few points with which he agreed with the president. However, Trump's consent to ZTE dismantles everything that has been achieved so far with China, the senator believes. "Placing our national security at risk in exchange for minor prerogatives in the commercial sphere is the exact definition of a myopic policy", Schumer said.
And although it seems chauvinism of the American legislators, they are really right. The ZTE case will help other companies, including Russians, to violate Washington's regulations on Iran and North Korea. Therefore, senators fear a domino effect will take place.
It looks like an exchange of favors in the public eye, but Treasury Secretary Steven Mnuchin denied that it was about giving in to China and reducing sanctions.
And although nobody really knows what the president and Mnuchin are plotting, the unexpected turn with ZTE caused the Secretary of Treasury to render an account before a Senate committee. However, neither Democrats nor Republicans remained quite in Congress and both sides accused the government of weak and solicitous regarding ZTE, a company that violated the restrictions of the United States.
In front of the legislators Mnuchin reiterated that the objective was not to bring the company to bankruptcy but to comply with Washington regulations regarding trade with Iran, something that has been very clear to ZTE directive board that was on the verge of a financial catastrophe when they were forbidden to obtain American components.
This would entail economic damages for North American companies that export and produce components for telecommunications devices. Perhaps that is why the president said that the ZTE issue was "part of a broader trade agreement" that was being negotiated with China. ZTE, for the production of its telephones and other terminals, uses chips and components from companies such as Qualcomm and Dolby.
Despite Xi Jinping and Donald Trump are looking for the best way to find a viable solution to the trade dispute that both have, several right-wing senators oppose the solution to the conflict. The tolerance with ZTE led Marco Rubio to criticize Trump’s government. "If this is true, the government has capitulated to #China and #ZTE", he wrote on Twitter.
On the other hand, Schumer strongly believes that restructuring the ZTE directive board and paying a fine will not prevent ZTE and other Chinese companies from spying on and stealing American technology as well as trading with the enemies of the nation.
Nevertheless, the flexibility of the White House goes a little further. For months they have started the race for 5G technology, the main jewel of telecommunications in the coming years and logically, ZTE is another of the Chinese companies that, together with Huawei, has started the race for its leadership. Perhaps one of the plans is the creation of partnerships with North American companies for 5G networks’ development in the United States.
Let’s recall that during the Mobile World Congress ZTE was the first company to introduce a 5G mobile device and it was done by Qualcomm's technology. Therefore, the business ending with the Chinese company would mean billions of dollars for business cancellation.