Congressional bid to block ZTE possible: Marco Rubio

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The inside of a ZTE smartphone is pictured in this illustration taken on April 17, 2018.

The Trump administration has struck a deal to lift a ban on Chinese cellphone maker ZTE, according to multiple reports, potentially putting President Trump on a collision course with Congress. The fine would come on top of the roughly $1 billion ZTE has paid for selling equipment to North Korea and Iran in violation of US sanctions, according to news reports.

Trump earlier in the week suggested that he might fine ZTE up to $1.3 billion and shake up its management while rolling back earlier penalties that crippled the company's business under a deal with Beijing connected with broader trade negotiations.

The US Commerce Department would then lift the denial order that prevents ZTE from buying American products.

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On Wednesday, Secretary of State Mike Pompeo told the House Foreign Affairs Committee that the administration would devise a plan to reduce the risks to the USA posed by ZTE.

The deal, communicated to officials on Capitol Hill by the Commerce Department, requires ZTE to pay a substantial fine, place American compliance officers at the company and change its management team, the aide said.

ZTE ran into trouble in 2016 for violating USA laws restricting the sale of American technology to Iran. ZTE shut down most of its production after the ruling was announced. The fine would come on top of the roughly $1 billion ZTE has already paid for selling equipment to North Korea and Iran in violation of USA sanctions. It is publicly traded, but the largest shareholder is a Chinese government-run company. That bill was approved after the administration signaled it was reconsidering penalties against the company.

The company has lost over $3bn since the April 15th ban on doing business with United States suppliers, according to a source familiar with the matter.

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The US government will remove sanctions on the Chinese telecommunications giant ZTE Corp in exchange for fines and changes in its internal operations, people familiar with the matter have said.

The proposed deal may still face opposition from members of the US Congress. Senators such as Marco Rubio, Chuck Schumer and Mark Warner criticised Trump's proposal, saying he was underestimating the national security interests at stake.

"ZTE presents a national security threat to the United States - and nothing in this reported deal addresses that fundamental fact", Senator Chris Van Hollen, a Maryland Democrat, said in a statement.

Senate Minority Leader Chuck Schumer of NY was similarly sceptical, saying that "both parties in Congress should come together to stop this deal in its tracks". "If President Trump won't put our security before Chinese jobs, Congress will act on a bipartisan basis to stop him", said Sen.

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Some Chinese officials have said they would not follow through on other parts of the trade talks until US officials reach an agreement to free ZTE. The ban amounted to a virtual death sentence for ZTE, which relies on US parts, and it also hurt ZTE's USA suppliers.