Congress threatens to block deal between White House and China on ZTE

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The Trump administration accused the company of violating the 2017 settlement after ZTE was caught shipping United States components to North Korea and Iran and ordered to pay a $900 million penalty.

ZTE and Huawei, another Chinese firm, have faced intense scrutiny since a 2012 report from Congress warned that the companies' technology could be used by the Chinese government to conduct surveillance on the U.S.

Fox News said Trump told them on Thursday that he had negotiated the $1.3 billion fine with Chinese President Xi Jinping in a phone call.

If ZTE agrees to the deal, the Commerce Department would roll back restrictions it imposed in April that prohibited US companies from selling parts to the Chinese firm.

"If the president and his team won't follow through on tough sanctions against ZTE, it's up to Congress to ensure that it happens", Senate Minority Leader Charles Schumer (D-N.Y.) said in a statement.

In April, the Commerce Department said ZTE instead paid full bonuses to employees who engaged in the illegal conduct, failed to issue letters of reprimand and lied about the practices to USA authorities. "This is also reflective of the larger trade deal we are negotiating with China and my personal relationship with President Xi", Trump tweeted a day later. But news of the agreement drew immediate fire on Capitol Hill.

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"ZTE presents a national security threat to the United States - and nothing in this reported deal addresses that fundamental fact".

The Senate Banking Committee in a 32-2 vote Tuesday advanced legislation that limited the president's ability to ease sanctions on Chinese telecom companies, requiring the administration first prove to Congress that the company is complying with USA law.

William Evanina, the acting director of the National Counterintelligence and Security Center, said at his May 15 confirmation hearing that he would not use a ZTE phone nor recommend that anyone in a sensitive position in government use one.

The ban was placed on ZTE after its management failed to comply with punishments imposed on them by the U.S. following around 40 of its employees selling "hundreds of millions of [US] dollars'" worth of routers, microprocessors and servers to Iranian entities in violation of the US's Export Administration Act of 1979. It would now be allowed to resume business with USA companies, including chipmaker Qualcomm Inc. US -traded shares of NXP Semiconductors NV rose 4.7 percent after the announcement, as signs of better U.S.

ZTE needs US components for its mobile phones and network equipment. U.S. Commerce Secretary Wilbur Ross is scheduled to visit China next week for another round of talks.

As part of the agreements ZTE made past year it dismissed four senior employees. "This is particularly critical when the violators are state-owned and -influenced, part and parcel of China's policies and practices created to strengthen its own national security innovation base, and essential tools of efforts to spread China's influence in other countries that pose national security threats to the United States".

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