In Trump rebuke, US Senate votes to reimpose ban on China’s ZTE

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In this Feb. 26, 2014, file photo, people gather at the ZTE booth at the Mobile World Congress, the world's largest mobile phone trade show in Barcelona, Spain.(AP Photo/Manu Fernandez, File)
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A woman stands outside a building of ZTE Beijing research and development center in Beijing, China on June 13, 2018. (REUTERS/Jason Lee)
Updated 19 June 2018
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In Trump rebuke, US Senate votes to reimpose ban on China’s ZTE

  • ZTE has been on life support ever since Washington said it had banned US companies from selling crucial hardware and software components to the company for seven years.
  • ZTE's fiberoptic networks depend on US components and its cheap smartphones sold en masse abroad are powered by US chips and the Android operating system.

WASHINGTON: The US Senate defied President Donald Trump by voting Monday to overrule his administration’s deal with Chinese telecom firm ZTE and reimpose a ban on high-tech chip sales to the company.
Senators added an amendment targeting ZTE into a sweeping, must-pass national defense spending bill that cleared the chamber on an 85-10 vote.
The company has been on life support ever since Washington said it had banned US companies from selling crucial hardware and software components to ZTE for seven years, after staffers violated trade sanctions against Iran and North Korea.
It was fined $1.2 billion for those violations, but earlier this month the Trump administration gave ZTE a lifeline by easing sanctions in exchange for a further $1.4 billion penalty on the company.
The Senate measure nullifies that action, proposing an outright ban on the government buying products and services from ZTE and another Chinese telecoms firm, Huawei.
“We’re heartened that both parties made it clear that protecting American jobs and national security must come first when making deals with countries like China, which has a history of having little regard for either,” a bipartisan group of senators said.
The lawmakers, who introduced the amendment, include top Democrat Chuck Schumer and Republican Marco Rubio.
Providing $716 billion in funding for national defense for fiscal year 2019 and giving policy guidance to the Pentagon, the bill is not a done deal.
The House of Representatives passed its own version of the measure, and the two chambers must now hash out a compromise.
“It is vital that our colleagues in the House keep this bipartisan provision in the bill as it heads toward a conference,” Schumer and Rubio said.
ZTE, which employs 80,000 people, said recently that its major operations had “ceased” after the ban, raising the possibility of its collapse.
Its fiberoptic networks depend on US components and its cheap smartphones sold en masse abroad are powered by US chips and the Android operating system.


US courts allies with free trade offers at G20, France resists

Updated 22 July 2018
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US courts allies with free trade offers at G20, France resists

BUENOS AIRES: The US sought to woo Europe and Japan with free trade deals on Saturday to gain leverage in an escalating tariff war with China but its overtures faced stiff resistance from France at a G20 finance ministers meeting dominated by trade tensions.
US Treasury Secretary Steven Mnuchin told reporters at the gathering of the financial leaders of the world’s 20 largest economies in Buenos Aires that he was renewing President Donald Trump’s proposal that G7 allies drop trade barriers between them.
“If Europe believes in free trade, we’re ready to sign a free trade agreement,” Mnuchin said, adding that such a deal would require the elimination of tariffs, non-tariff barriers and subsidies. “It has to be all three issues.”
Trump has angered European allies by imposing import tariffs of 25 percent on steel and 10 percent on aluminum, causing the European Union to retaliate with similar amounts of tariffs on Harley-Davidson motorcycles, Kentucky bourbon and other products.
Trump, who frequently criticizes Europe’s 10 percent car tariffs, is also studying adding a 25 percent levy on automotive imports, which would hit both Europe and Japan hard.
French Finance Minister Bruno Le Maire said the European Union would not consider launching trade talks with the United States unless Trump first withdraws the steel and aluminum tariffs and stands down on a car tariff threat.
“We refuse to negotiate with a gun to our head,” Le Maire told reporters on the sidelines of the G20 meeting.
Trump has angered European allies by imposing import tariffs of 25 percent on steel and 10 percent on aluminum, causing the European Union to retaliate with similar amounts of tariffs on Harley-Davidson motorcycles, Kentucky bourbon and other products.
Trump, who frequently criticizes Europe’s 10 percent car tariffs, is also studying adding a 25 percent levy on automotive imports, which would hit both Europe and Japan hard.
French Finance Minister Bruno Le Maire said the European Union would not consider launching trade talks with the United States unless Trump first withdraws the steel and aluminum tariffs and stands down on a car tariff threat.
“We refuse to negotiate with a gun to our head,” Le Maire told reporters on the sidelines of the G20 meeting.
IMF Managing Director Christine Lagarde presented the G20 finance ministers and central bank governors meeting in Buenos Aires with a report warning that existing trade restrictions would reduce global output by 0.5 percent.
In the briefing note prepared for G20 ministers, the IMF said global economic growth may peak at 3.9 percent in 2018 and 2019, while downside risks have increased due to the growing trade conflict.
Lagarde’s presentation came shortly after Mnuchin said there was no “macro” effect yet on the US economy.
Mnuchin said that, while there were some “micro” effects such as retaliation against US-produced soybeans, lobsters and bourbon, he did not believe that tariffs would keep the United States from achieving sustained 3 percent growth this year.
The US dollar fell the most in three weeks on Friday against a basket of six major currencies .DXY after Trump complained again about the greenback’s strength and about Federal Reserve interest rate rises, halting a rally that had driven the dollar to its highest in a year.
The last G20 finance meeting in Buenos Aires in late March ended with no firm agreement by ministers on trade policy except for a commitment to “further dialogue.”
Brazilian Finance Minister Eduardo Guardia said participants agreed the risks to the global economy had increased since their last meeting, citing rising trade tensions and higher interest rates by major central banks.
He said the final communique would reflect the need for members, particularly in emerging markets that have been roiled by currency weakness, to undertake reforms to protect themselves against volatility.
German Finance Minister Olaf Scholz said he would use the meeting to advocate for a rules-based trading system, but that expectations were low.
“I don’t expect tangible progress to be made at this meeting,” Scholz told reporters on the plane to Buenos Aires.
The US tariffs will cost Germany up to 20 billion euros ($23.44 billion) in income this year, according to the head of German think-tank IMK.
Bank of Japan Governor Haruhiko Kuroda said he hoped the debate at the G20 gathering would lead to an easing of retaliatory trade measures.
“Trade protectionism benefits no one involved,” he said. “I think restraint will eventually take hold.”