Monday, 14 May 2018 05:16

In tweet, Trump signals reversal of US policy on ZTE

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US policy on China's ZTE Corporation appears to have been changed, with US President Donald Trump tweeting that he has asked the Commerce Department, which imposed a seven-year export ban on the company, to help it "get back into business, fast".

On Sunday US time, Trump tweeted: "President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!"

The US and China are holding talks to try and avert an all-out trade war and Trump's tweet came ahead of a second round of talks scheduled for this week. In 2017, ZTE paid more than US$2.3 billion to 211 American suppliers.

Reuters, quoting people familiar with the matter, reported that in the first round of talks, held last week, China had asked the US to ease the crushing sanctions on ZTE; the company has also asked the US to reconsider the ban .

Companies like Acacia Communications, Oclaro, Lumentum Holdings, Finisar Corporation, Inphi Corporation and Fabrinet have seen their share prices fall after the ban on exporting components to ZTE was announced last month.

Reuters quoted a Washington lawyer, Douglas Jacobson, as saying: "“This is a fascinating development in a highly unusual case that has gone from a sanctions and export control case to a geopolitical one.

"There’s no legal mechanism for this. How this will play out remains to be seen. They are not simply going to be able to resume business as usual." Jacobson acts for some ZTE's suppliers.

The US Department of Commerce imposed the ban on ZTE in April, saying at the time that it was due to alleged false statements made by the company during talks in 2016 over a charge of shipping telco equipment to Iran and North Korea.

As a penalty, US firms cannot sell parts to ZTE for seven years.

ZTE was fined US$1.19 billion in March 2017 and also agreed to a seven-year suspended export ban which would take effect if it was found to be in violation of the Export Administration Regulations.

Subsequently, the Department of Commerce claims to have found that statements made by ZTE to the Bureau of Industry and Security were false.

Australia's biggest telco Telstra has taken 22 ZTE devices off its shelves after the company said it was halting its main business activities in the US.

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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