Commerce Secretary Wilbur Ross said Monday that the Trump administration is open to changing its ban on U.S. companies buying and selling products from Chinese phone-maker ZTE, a day after President Donald Trump hinted at a surprising reversal.
“ZTE did do some inappropriate things. They’ve admitted to that,” Ross said at a National Press Club event. “The question is: Are there alternative remedies to the one that we had originally put forward? And that’s the area we will be exploring very, very promptly.”
Ross’s Commerce Department levied a harsh penalty against the electronics company last month, imposing a seven-year ban on American companies selling or purchasing its products. The U.S. had reached an agreement with ZTE in March 2017 that included a $1.19 billion fine, but it added the new ban because it said the company broke the agreement by failing to punish top managers.
ZTE acknowledged in the agreement that it had violated sanctions on Iran and North Korea, but the new penalty seemed poised to destroy ZTE. The phone-maker announced last week that it had stopped “major operating activities,” and The New York Times reported that workers at a Shenzhen plant had almost nothing to do.
But Trump appeared to dangle a lifeline Sunday. “President Xi [Jinping] of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast,” he tweeted. “Too many jobs in China lost. Commerce Department has been instructed to get it done!”
Addressing U.S.-China trade disputes Monday, Ross said the ZTE situation “does demonstrate China’s dependence on U.S. technology. Given all of these factors, I hope that we can make a fair deal. But if it doesn’t happen, a trade tit-for-tat will not be economically life-threatening to the United States.”
Ross said “it also wouldn’t surprise me” if ZTE comes up in broader trade negotiations with China this week. Vice Premier Liu He is leading a delegation to Washington beginning Tuesday.
And asked about cybersecurity concerns with ZTE, Ross said, “We know even more about the situation than the leaks would let on. … The part that would be interesting is classified.”
Trump’s declaration added a new dimension to a set of high-stakes foreign policy shifts involving the countries ZTE flouted sanctions to engage.
The president is looking to Xi for cooperation on North Korea ahead of his summit with dictator Kim Jong Un next month. Meanwhile, he’s further cracking down on Iran after withdrawing from the nuclear deal last week: Administration officials have openly threatened sanctions for European companies doing business in the country.
The Trump administration may also want to use ZTE to extract other concessions from China — particularly on tariffs, as a potential trade war between the world’s two largest economies has heated up in recent months. The Washington Post reported Sunday that senior officials are discussing a targeted deal.
Trump’s possible reversal on ZTE quickly worried China hawks, including lawmakers in his own party.
“Problem with ZTE isn’t jobs & trade, it’s national security & espionage,” Sen. Marco Rubio (R-Fla.) tweeted Monday morning. “Any telecomm firm in #China can be forced to act as tool of Chinese espionage without any court order or any other review process. We are crazy to allow them to operate in U.S. without tighter restrictions.”
“I hope this isn’t the beginning of backing down to China,” Rubio added.