President Trump on Friday confirmed an agreement has been reached between Washington and China's tech giant ZTE that will allow the company to get back into business, exchanging its seven-year ban on purchasing American hardware and software with a $1.3 billion fine, board and management changes, "high level [sic] security guarantees," and a pledge to buy more U.S. components moving forward. The President also criticized New York Senator Chuck Schumer and the former Obama administration for allowing ZTE to "flourish with no security checks," maintaining he did more to address the situation than the previous government.
The President previously related the ZTE episode to broader trade negotiations between Washington and Beijing, with the latter being the majority owner of the publicly traded company and President Xi Jinping personally pushing the United States to help return the smartphone and telecom equipment maker back to business. ZTE's main operations were halted earlier this month as its inability to continue purchasing Qualcomm's Snapdragon chips and licensing an up-to-date version of Google's Android operating system, among other things, effectively crippled the entirety of its mobile division. President Trump's willingness to assist the company in having the denial order lifted drew criticism from both his political opponents and members of the Republican party, including Florida Senator Marco Rubio. Political actors opposing the lifeline deal claim the move provides little benefit to the U.S. and describe ZTE as a national security threat.
The Commerce Department sanctioned ZTE due to its failure to comply with a 2017 settlement over an admitted conspiracy to violate U.S. trade sanctions imposed on Iran and North Korea where the company has been importing products using American technologies as late as 2016. The federal regulator also accused the Shenzhen-based firm of repeatedly lying to its investigators, whereas ZTE argued its inability to adhere with the terms of the settlement was unintentional and self-reported to Washington after being identified, thus concluding the initial penalty was unfair.
The current draft of the National Defense Authorization Act contains a clause that effectively requires congressional approval for the reversal on the ZTE issue to be realized, yet the lifeline deal is presently facing significant bipartisan opposition in both the House and Senate. It's presently unclear whether the White House will attempt having the provision in question removed. Earlier this month, the Pentagon issued a directive preventing retailers in and near its military bases in the country and abroad from selling ZTE and Huawei phones, citing national security risks. Critics are arguing that a monetary fine and other concessions Washington negotiated with ZTE don't protect American security in any shape or form. ZTE repeatedly dismissed the notion of being a used as a spying tool by Beijing in recent years.