Published: Wed, May 16, 2018

Political backlash grows against Trump's helping hand to ZTE

Political backlash grows against Trump's helping hand to ZTE

Unsurprisingly, Trump's Sunday tweet took many in his inner circle by surprise.

"American workers and companies confront rampant theft of US intellectual property, agricultural policies that disadvantage American farmers, restrictions on market access for USA service providers and manufacturers, and mercantilist industrial policies that have cost USA workers their jobs", they wrote. The visit is a follow-up to talks led by U.S. Treasury Secretary Steven Mnuchin in Beijing earlier this month, when they failed to bridge their wide differences.

"There are many areas where China has promised to do but haven't. Commerce Department has been instructed to get it done!" But most of its products rely on core technology supplies from American companies like Qualcomm and Intel.

The ban came after ZTE apparently violated the terms of a settlement, in which it was fined US$1.1 billion (S$1.4 billion) in March previous year for violating USA sanctions by shipping American technology to Iran and North Korea.

In a statement Monday, Ross noted taking action on ZTE is a different issue than the trade dispute with China. "The question is if there are alternative remedies other than the one we've already put forward".

As such, the Democratic senators urged Trump to focus on identifying effective strategies to reshape China's policy approach in each of these areas, such as through enforceable commitments to eliminate forced technology transfer policies, market distorting subsidies, data localisation policies, and foreign investment restrictions, and ensuring nondiscriminatory treatment of U.S. firms in regulatory and other proceedings. As a result, last month, after the Commerce Department ordered USA companies to stop selling components to ZTE, the company was forced to put all production activities on hold. But over in the legislative branch, Reuters reports that the reaction has been strongly negative. The company's phones were described as a security risk by the Pentagon and USA intelligence agencies.

US manufacturers, consumer products companies and technology groups that filed written submissions opposing the planned Chinese tariffs say they would raise input costs and consumer prices and draw crippling retaliatory duties from China. In return, China removes tariffs on U.S. farmers who did no wrong.

"We'd like to see China being just as open as the United States", he said. "So they can't say they don't know what we're asking for", he said.

The US$44 billion deal announced in October 2016 has reportedly received approval from nine global regulators, but not yet from China's Ministry of Commerce - which, according to reports, has now been asked to hasten its review.

The US is demanding a significant reduction in the US$375 billion goods trade deficit with China. We want to see a timetable.

Mr Ross shrugged off fears of Chinese retaliation.

ZTE, most recently valued at $20 billion, is the largest telecom equipment maker in China and sells smartphones globally.

Even a full US$50 billion hit to U.S. exports to China would be "painful to the direct targets but would have less than three-tenths of 1 per cent impact on our US$18 trillion economy".

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