US Cuts Deal With Chinese Smartphone Maker ZTE, Despite Opposition From Senators

(CNN Money) — Chinese smartphone maker ZTE will pay a fine of $1 billion and bring an American monitoring team on board to resolve a high-profile dispute with the United States.

The deal, announced by US Commerce Secretary Wilbur Ross, will mean the end of a ban on ZTE buying American parts, provided the state-controlled company sticks to the terms.

Ross said the deal was struck at around 6 a.m. ET on Thursday, and it will impose “the most strict compliance that we’ve ever had on any company, American or foreign.” ZTE will also put $400 million in an escrow account.

The fate of the company has become a major flashpoint in trade tensions between the United States and China.

In April, the US Commerce Department blocked American firms from selling parts or providing services to ZTE, which also makes telecommunications equipment.

The crippling ban was put in place after Washington said ZTE violated a 2017 deal in which the Chinese company admitted to evading sanctions on Iran and North Korea.

“Prior administrations have been real patsies for the Chinese and for other countries. They’ve never really pushed back,” Ross said. “So I think the Chinese are well aware there’s a new marshal in town and it’s called Donald J. Trump, and he’s a very, very good shot.”

But the deal came under fire from Senator Chuck Schumer, who accused President Trump of shooting “blanks” at China while aiming his trade fire at allies such as Europe and Canada.

“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,” he said in a statement.

Arkansas Senator Tom Cotton has a cautious approach to the Chinese telecom companies ZTE and Huawei.

“Huawei and ZTE have extensive ties with the Chinese Community Party, as well as a track record of doing business with rogue regimes like North Korea and Iran. So it’s only prudent that no one in the federal government use their equipment or services and that they receive no taxpayer dollars. Given their repeated violations of U.S. law, we cannot trust them to respect U.S. national security, and so it’s vital we hold them accountable and pass this amendment,” said Senator Cotton.

Senators Tom Cotton (R-Arkansas), Chris Van Hollen (D-Maryland), and Chuck Schumer (D-New York) introduced an amendment to the National Defense Authorization Act to respond to the national-security threat posed by Chinese telecom companies like Huawei and ZTE.

The amendment would prohibit all U.S. government agencies from purchasing or leasing telecommunications equipment and/or services from Huawei, ZTE, or any subsidiaries or affiliates. It would also ban the U.S. government from using grants and loans to subsidize Huawei, ZTE, or any subsidiaries or affiliates. The amendment  would restore penalties on ZTE for violating export controls.