The Senate wrecked Trump’s deal to save ZTE

A woman stands outside a building of ZTE Beijing research and development center in Beijing China

That version prevents the government from purchasing ZTE and Huawei products - but doesn't reimpose the sanctions-related restrictions lifted under Trump's deal. When the White House cut a deal with the company last week (imposing a US$1.4 billion fine and a board restructure), Schumer put out a statement calling on Congress to reverse it, saying "There is absolutely no good reason that ZTE should get a second chance, and this decision marks a 180 degree turn away from the president's promise to be tough on China".

China's No. 2 telecommunications equipment maker was crippled when the United States imposed a seven-year supplier ban on the company in April after it broke an agreement to discipline executives who conspired to evade US sanctions on Iran and North Korea.

ZTE (0763.HK) did not immediately respond to requests for comment on Monday. If it passes, Trump would be forced to sign the law himself, as he would be unable to separate the popular defense bill from the ZTE sanctions.

Experts say the company faces challenges in getting its factories up and running again while also overhauling its management to meet the terms of the U.S. deal. Little of that happened, however, and the Commerce Department enacted a seven-year suspended ban against ZTE in retaliation. "Therefore, ZTE will most likely be able to resume operations in middle of next week".

The company is trying to speed up the process of paying the fine and has applied to the United States commerce department's Bureau of Industry and Security to open a bank account in the U.S. to deposit the US$400 million escrow payment, according to people with knowledge of the matter. The Chinese smartphone and network equipment maker had been caught selling goods and services to North Korea and Iran, violating USA sanctions. After 10 years, if there are no violations, the $400 million will be returned to ZTE.

The Senate is due to vote as soon as this week on legislation that would block the settlement agreement, included as an amendment to a must-pass defence policy bill.

USA lawmakers have attacked Washington's agreement with ZTE and plan legislation to roll it back, citing intelligence warnings that ZTE poses a national security threat.

As part of the order, ZTE must identify in detail to the Commerce Department all Chinese government ownership and control of ZTE, including public and private shares.

In a meeting for senior management on Tuesday, ZTE chairman Yin Yimin said that the company needs its 80,000 employees to have "thorough knowledge" and "thorough supervision" of each other when it comes to compliance, rather than rely on a few people from a compliance team.

"The compliance monitor will be on the same level as ZTE's CEO and board on compliance matters".

A separate monitor was appointed to a three-year term by a USA federal court in Texas last year.

The settlement, which was made public on Monday, would allow China's No. 2 telecommunications equipment maker to resume business with USA suppliers. It depends on US-made components for the production of handsets.

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