Published: Fri, May 25, 2018
Worldwide | By Gretchen Simon

ZTE could reportedly receive reprieve in tentative US-China trade deal

ZTE could reportedly receive reprieve in tentative US-China trade deal

President Trump on Tuesday said he was not happy about the progress of trade talks with China - but also suggested that the USA would likely cut a deal to keep Chinese telecommunications giant ZTE in business.

The Wall Street Journal reported that China and the USA have agreed on the "broad outline" of a settlement to the seven-year ban on ZTE.

While ZTE was being punished over the sales to Iran, the ban has become entwined in the trade dispute between the U.S. and China. President Trump railed against the imbalance in trade tariffs in April, tweeting that they amount to "STUPID TRADE".

The Commerce Department slapped sanctions on ZTE after determining the company sold goods containing U.S. parts into Iran and North Korea, a violation of USA sanctions against those two countries. Mr. Trump has indicated now, however, that, in deference to his good relationship with Chinese dictator Xi Jinping, the United States would settle for a fine and changes to ZTE management.

As part of the deal, China reportedly offered to remove tariffs that impact billions of dollars in US farm products, though one of the WSJ's sources said "the White House was meticulous in affirming that the case is a law enforcement matter and not a bargaining chip in negotiations". The U.S. officials left for China with cautious optimism and headed home with the message that the trade relationship between the two nations required "immediate attention".

Improved access to the Chinese market is a key demand of United States negotiators, who say Chinese rules put global firms at a disadvantage.

China responded with its own measures targeting USA agriculture. Despite reporting in The Wall Street Journal stating that Trump had reached a deal with China to revive ZTE, the president is now pushing back on those claims, saying that his administration has yet to come to an agreement.

In return for ZTE's return to grace, the USA government would back down on tariffs regarding agriculture and while China would agree to buy more milk and meat and such from the US.

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However, it could be that the position of the company is being used as a bargaining chip in trade talks between the USA and China.

Mr Trump's proposal ran into immediate resistance in Congress, where Republicans and Democrats accused the President of bending to pressure from Beijing to ease up on a company that has admitted to violating sanctions on Iran.

Tension between the two sides has been growing since the Trump administration proposed tariffs of $US50 billion ($66 billion) on Chinese goods and said it might extend the levies to an additional $US150 billion ($199 billion). Negotiations are now behind closed doors, so it's unlikely we'll learn much more about this deal before it is settled.

The president outlined the possible alternative while speaking to reporters in Washington on Tuesday at a meeting with the president of South Korea.

"In the face of Washington's unreasonable pre-conditions in earlier consultations, Beijing had always returned with resolute responses and had never backed down", one commentary on China's official media Xinhua read.

"And in that communique, you can see where we're going next".

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