Last month, the U.S. Commerce Department imposed a ban on the sales of U.S. components to Chinese manufacturer, ZTE.
With the ban in place, it put a dent on ZTE’s manufacturing operations and endangered the company to go out of business. And since companies, like Qualcomm, get a huge chunk of their sales on the sales of chipsets and components to the Chinese manufacturer, the ban posed a major impact on the wireless market of the U.S. Thankfully, the two governments are reportedly working together to come up with an agreement on how they can repeal the ban.
Earlier today, the Wall Street Journal, reported that the two countries have come up with an agreement. The report showed that the two countries decided on a “broad outline” of a deal in order to peacefully settle a trade dispute. If you’ve been following the news, the ban was imposed after the Commerce Department discovered that ZTE violated sanctions against North Korea and Iran. The ban was supposed to prohibit American companies from selling to the Chinese manufacturer for a total of seven years.
If the deal is finalized, the U.S. government will be lifting its ban. In exchange for this, ZTE will be enforced to make major changes to its leadership. It could also be facing heavy fines. Since the ban poses irreversible damage to ZTE’s business, this deal could be its best chance at survival. After all, several of its important suppliers (Qualcomm included) are American. Not to mention, ZTE will continue to be able to sell mobile phones to the U.S., where it is considered as the fourth largest vendor.
For its part, China will be required to remove tariffs on imported agricultural products from the U.S. It will also be required to buy more farm goods from the U.S.
It looks like the Chinese government is on board with the deal. Earlier this month, U.S. President Donald Trump sent a tweet that he was working with China’s President Xi on giving ZTE “a way to get back into business, fast.”
Not everyone is pleased with the decision of the POTUS, however, as he was met with backlash from lawmakers and officials. Florida senator Marco Rubio is one of the officials leading a rebellion with Congressional republicans against the president’s trade brinkmanship.
On Tuesday, President Trump affirmed that a deal has not yet been reached with China over the fate of ZTE. The president iterated that he was not satisfied in last week’s trade talks that took place in Washington.
One of the options being considered is fining ZTE $ 1.3 billion as punishment for violating sanctions in the first place.
Source: Fierce Wireless, FT