ZTE Sanctions Negotiated as U.S. Trade Bargaining Chip

ZTE, a Chinese electronics maker that illegally sold U.S.-made parts in smartphones to countries that are banned from access, like Iran and North Korea, shut down last week. Now President Trump stepped in to help in what many view as a bargaining stance with China.

An acronym for Zhongxing Telecommunications Equipment, ZTE is one of two companies that sell cellular network components in China and abroad, making it an important force for Chinese investment and influence in other countries.

Since almost every telecom product has American-made components, from a Qualcomm chip to modems to the Android operating system, its sale of phones to banned countries including Sudan, Syria and Cuba prompted the U.S. government to fine the company $1.9 billion. Then because it didn’t punish senior executives, the Commerce Department made it illegal for American technology companies to sell products to ZTE for seven years. This effectively put the company out of business, since four-fifths of its products contain U.S. components.

According to a story in The New York Times by Paul Mozur, Trump’s move may be a bargain chip for better positioning in trade with China.

…the Trump administration is pressuring China to make trade concessions. It may also need Beijing’s help to strike a deal with North Korea as Washington and Pyongyang plan a high-profile meeting next month in Singapore.

read more at NYTimes.com