Trump administration takes major step to help Chinese firm ZTE

The Commerce Department took a major step to loosen its restrictions on the controversial Chinese telecommunications company ZTE Corp., signing an escrow agreement that paves the way for the firm to continue doing business with U.S. companies. The move came under pressure from President Donald Trump, who had told Chinese leader Xi Jinping he would help ZTE after the company was met with severe restrictions for violating U.S. sanctions. The Commerce Department in April announced severe penalties against ZTE, punishment for violating sanctions by selling products to Iran and North Korea and then lying about its practices to federal investigators. Among other things, ZTE was barred from doing business with U.S. companies, a move many in the U.S. and China believed would serve as a death sentence for the firm. But President Trump agreed to help the firm out as a way to try to spark concessions from Beijing during broader trade negotiations. Those trade discussions have recently faltered, but Trump’s commitment to help ZTE has not wavered. He said Chinese President Xi’s personal appeal to him to help the company was persuasive.

The Commerce Department said the July 11 agreement established an escrow account, which allows the company to transfer $400 million in reserves. This was a condition of its release from severe regulatory penalties. Once the company deposits $400 million into the account, it will no longer be prohibited from doing business with U.S. companies.