Published: Thu, June 21, 2018
Global | By Shelia Dennis

US Senate votes to ban ZTE

US Senate votes to ban ZTE

The company has been on life support since Washington said it had banned United States companies from selling crucial hardware and software components to ZTE for seven years.

The deal led to unhappiness from both Democrats and Republicans, with a bipartisan group of senators putting forth an amendment within two weeks to re-instate the component sales ban.

The legislation, passed by 85-to-10 late on June 18, also contains a provision to block President Donald Trump's deal with China to allow the telecommunications giant ZTE to stay in business despite violations of USA sanctions against Iran and North Korea.

The Senate voted 85 to 10 in support of reinstating the ban.

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ZTE's plight began in April when the US Department of Commerce imposed a seven-year ban on American companies doing business with the Chinese phonemaker after it exported telecoms equipment to Iran and North Korea. That compromise measure must then be passed by both chambers and signed into law by Trump.

The new policy would keep financial penalties on ZTE for violating US sanctions in 2017, and would ban government agencies from buying their products.

The Senate version of the bill will now be sent to committee, where senators will resolve differences between it and the House version passed in May.

Almost two weeks ago, Ross announced in a Commerce Department statement that ZTE "agreed to severe additional penalties and compliance measures to replace the U.S. Commerce Department's Bureau of Industry and Security (BIS) denial order imposed as a result of ZTE's violations of its March 2017 settlement agreement". So if he vetoes the defense spending bill because of a ZTE provision, that move could be seen as prioritizing a personal favor to the Chinese government above national defense - and above any actual conviction about using sanctions to impose U.S. will around the world.

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Shares of ZTE Corp plunged on Tuesday (June 19) after the US Senate's passage of a defence Bill set up a potential battle with the White House over whether the Chinese telecoms firm can resume business with its US suppliers.

Notably, the House version of the bill doesn't include the amendments prohibiting ZTE from doing business in the US, so it remains to be seen whether the final bill will have those provisions intact.

Trump plans to host Republican members of Congress Wednesday to discuss a path forward on ZTE and other issues. If this passes, fellow Chinese smartphone maker Huawei will also be prevented from using US-made equipment within its devices.

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