ZTE Threatened With ‘Painful’ Consequences If It Violates Lifeline Deal
In short: United States Senator Mark Warner on Tuesday threatened Chinese electronics manufacturer ZTE with "significant, painful" consequences should it violate the lifeline deal it received following repeated issues with its (lack of) compliance with stateside trade sanctions. The remarks were made following the introduction of a bill that would put ZTE back on course toward bankruptcy if it doesn't fully adhere to the terms of the new settlement. The top-ranking Democrat also used the opportunity to criticize the Trump administration for its handling of the matter, saying the Republican government demonstrated "it cannot be trusted to defend American interests and punish companies like ZTE that pose a threat to our security."
Background: ZTE — a company that's majority-owned by a Beijing-sponsored corporation — barely escaped bankruptcy after breaking a 2017 settlement reached following its violations of trade sanctions imposed on Iran and North Korea. Its stateside prospects remain grim but the firm resumed normal operations earlier this summer and is set to survive the episode. In exchange for lighter sanctions than the originally imposed seven-year denial order preventing it from purchasing and licensing any American technologies, ZTE replaced the entirety of its board and management, paid a new $1 billion fine, made another $400 million eschew payment, and financed an independent body monitoring its future trade embargo compliance. Industry watchers and many politicians, including those from President Trump's party like Florida Senator Marco Rubio, remain adamant ZTE is a national security risk that cannot be trusted to do business in the U.S. Earlier today, a security expert interviewed by AndroidHeadlines labeled ZTE and other Chinese companies such as Huawei as a "clear threat" to the West.
Impact: ZTE is likely to play it safe with U.S. trade sanction compliance going forward but if both the House and the Senate flip blue in November, the Shenzhen-based firm may find itself in a whole new world of hurt as bipartisan calls for its sanctions to be reinstated are circulating Capitol Hill even now and the Democratic party would likely look to act on them, being relatively immune to political pressure from the President.
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