Is it “America First,” or saving Chinese jobs? President Trump made a surprising turn from his campaign mantra “America First.” Trump says that he he now help a China-based cell-phone manufacturer save jobs.
The Commerce Department said this Chinese company sold U.S. technology to Iran and North Korea. They also failed to live up to the terms of a settlement.
ZTE is the world’s fourth-largest maker of cell phones. It was found in violation of U.S. rules against selling U.S.-originated technology to certain blacklisted countries. They reached a $1 billion settlement with the Commerce Department, and then violated the terms of the agreement. ZTE failed to fire some employees and reprimand others who were involved in the illicit technology transfers.
Seven Year Ban From Commerce Department
The Commerce Department imposed a seven-year ban on the company that prevented it from buying parts from U.S. manufacturers.
Commerce Secretary Wilbur Ross last month called ZTE’s behavior “egregious” and said it “cannot be ignored.”
Commerce was responding to Trump’s tough talk on trade. The seven year ban was described as a “death sentence” for the company, which employs some 70,000 workers in China.
Hence the surprise by many after Trump tweeted this on Sunday.
“President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!”
And then a few hours later, he tweeted: “China and the United States are working well together on trade, but past negotiations have been so one sided in favor of China, for so many years, that it is hard for them to make a deal that benefits both countries. But be cool, it will all work out!”
Be Cool, It Will All Work Out!
In the wake of Trump’s about-face, White House press secretary Lindsay Walters issued the following statement: “The President’s tweet underscores the importance of a free, fair, balanced, and mutually beneficial economic, trade and investment relationship between the United States and China. The administration is in contact with China on this issue, among others in the bilateral relationship. President Trump expects Secretary Ross to exercise his independent judgment, consistent with applicable laws and regulations, to resolve the regulatory action involving ZTE based on its facts.”
California Democratic Rep. Adam Schiff couldn’t help tweeting a response to the president: “Our intelligence agencies have warned that ZTE technology and phones pose a major cyber security threat. You should care more about our national security than Chinese jobs.”
Eswar Prasad, a professor of trade policy at Cornell University, said, “A reversal of the ZTE decision could temporarily tamp down trade tensions by allowing the Chinese to make concessions to the U.S. without losing face.”
“Trump may have recognized that backing off on ZTE clears the path for him to claim at least a partial victory in the US-China trade dispute based on the concessions the Chinese seem prepared to offer.”
Absolutely a Shocker
CNET Executive Editor Roger Cheng called the president’s move “absolutely a shocker,” while interviewing with NPR’s “All Things Considered.”
“ZTE makes smartphones that really utilize a lot of American technology, companies like Qualcomm, which makes processors or Intel, which makes chips – Corning, which makes display glasses. A lot of these U.S. companies supply major components and software technology to ZTE products,” Cheng tells NPR.
“So the argument that ZTE has been making quietly is that they actually invest a lot in the U.S. economy. Last year, they spent more than $2 billion purchasing technology from U.S. businesses. So, that’s probably an argument that helped sway President Trump.”
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