The IT Nerd

It’s official. ZTE is back in business thanks to the U.S. Senate deciding not to do anything to stop the Chinese telcom who has been accused of spying from rebooting itself after it’s recent near death experience:

Lawmakers from both parties have been at odds with President Donald Trump over his decision last week to lift his earlier ban on U.S. companies selling to ZTE, allowing China’s second-largest telecommunications equipment maker to resume business.

An amendment backed by two Republicans and two Democrats would have reinstated the sanctions but was stripped out of the must-pass defense policy bill, lawmakers said on Friday.

The change was made as lawmakers sought to hammer out differences between the Senate and House versions of the National Defense Authorization Act, which authorizes military spending but is generally used as a vehicle for a broad range of policy matters.

That’s unfortunate because ZTE was caught red handed doing a fair number of things it should not have been doing. Now it looks like almost but not quite business as usual. That’s a #Fail if I have ever seen one.

The title says it all pretty much. All the Chinese Telco had to do is fork over $400 million in escrow, do a bunch of other things to make the US happy and boom! Business is on again. At least that’s the key point in a statement that the Commerce Department in the US says. But the question is will they stay in business. After all the company was thumbing its nose at sanctions aimed at North Korea and Iran. Plus their gear was thought to have backdoors in them. Which in turn led to the suggestion that nobody use their gear. Thus I have to wonder if  we’ll be back talking about this in six months time or less?

The U.S. Senate has voted to reinstate a ban on ZTE that prevents the Chinese telecom company from buying U.S. components and using U.S. software. As The Verge notes, “it’s still not clear if the reversal will make it into law: it has to clear a conference with the House, and then avoid a veto from President Trump, who advocated for cutting a deal that would lift the ban.” Thus the games aren’t over just yet. But it’s clear that American politicians not named Donald Trump want to take down ZTE over violating sanctions on Iran and North Korea. Not to mention the general consensus that ZTE is a national security risk.

Let the games begin.

Remember that deal that President Trump came up with to give Chinese telecom ZTE a slap on the wrist? It didn’t go over so well with US Senators, who are now trying to kill the deal again in a novel way:

Senate leaders agreed Monday to include language in the annual defense spending bill that would reverse the Trump administration’s decision to save Chinese telecommunications company ZTE after it was caught violating the terms of a 2017 penalty agreement by making illegal sales to Iran and North Korea. The language will be part of an amendment in the 2019 National Defense Authorization Act, a $716 billion defense policy bill, H.R. 5515 (115).

If the Senate amendment becomes law, it would automatically reinstate the seven-year prohibition until Trump has certified to Congress that ZTE has met certain conditions. It also would ban all U.S. government agencies from purchasing or leasing telecommunications equipment and/or services from ZTE, a second Chinese telecommunications firm, Huawei, or any subsidiaries or affiliates of those two companies. The amendment language “prohibits the federal government from doing business with ZTE or Huawei or other Chinese telecom companies” and puts the company back on the sanctions list and “holds ZTE accountable for violating their previous commitment,” Cotton said.

That’s crafty. I’d be watching Twitter to see how the Twitter president reacts to this. Because I assume he’s going to have a meltdown when he finds out about this maneuver, and the fact that he can’t really stop it.

Well, it seems that ZTE may live another day thanks to a deal that they cut with the US. Here’s what they have apparently agreed to:

China’s ZTE will pay a $1 billion penalty and will embed a U.S. appointed compliance team, terms that are similar to those President Trump discussed last month when he revealed that Chinese leaders had asked him to look into the matter. “At about 6 a.m. this morning, we executed a definitive agreement with ZTE,” Commerce Secretary Wilbur Ross told CNBC in an interview Thursday. “And that brings to a conclusion this phase of the development with them.” Trump asked the Commerce Department to investigate the restrictions on ZTE in April following a request from Chinese President Xi Jinping. Commerce imposed a seven-year ban after the company sold American-made products to Iran, a violation of U.S. sanctions.

In my humble opinion, ZTE really won’t suffer. ZTE will easily recoup the $1 billion in penalties just by the fact that its share price will certainly jump up with this news alone. So they come out the winners in all of this. And the US would have missed a glorious opportunity to send a message to those who wanted to copy and paste ZTE’s behaviour.

Well this is confusing. First the Trump Administration punished ZTE to the point that ZTE was going to shut down. Then President Trump says he’s going to save ZTE because too many jobs in China have been lost. Now, President Trump put this out there:

Senator Schumer and Obama Administration let phone company ZTE flourish with no security checks. I closed it down then let it reopen with high level security guarantees, change of management and board, must purchase U.S. parts and pay a $1.3 Billion fine. Dems do nothing….

— Donald J. Trump (@realDonaldTrump) May 25, 2018

This is part of a larger effort in the form of a bill that goes like this:

• ZTE will pay a $1.3 billion fine
• ZTE will change its management and board
• ZTE will provide “high-level security guarantees.” Whatever that means.
• The bill will prohibit Chinese telcoms from doing business in the US.

My head is spinning from all this flip flopping. I’ll just stick around and watch to see if this changes again.

Multiple media outlets are reporting that US President Donald Trump is working to save jobs at Chinese phonemaker ZTE. This after the Trump Administration has been working to smack them around pretty hard. As is typical for Trump, he said this via a Tweet:

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!

— Donald J. Trump (@realDonaldTrump) May 13, 2018

The only thing that could be responsible for this is the upcoming meeting between Trump and North Korean leader Kim Jon Un. He likely needs the Chinese to help him get the North Koreans on side with the rest of the planet. Like many things that this administration does, this could flip on a moments notice, thus we’ll have to see what happens next. Because anything could happen.

UPDATE: Another possibility is that ZTE is a bargaining chip in trade talks between the US and China.

Weeks of the Trump administration in the US cranking up the pressure on Chinese phonemaker ZTE have resulted in ZTE shutting down. They employ 75000 people. The news popped up this morning via this PDF. Plus according to a report at The New York Times, manufacturing has been halted at ZTE’s plant in Shenzhen. This could be temporary as the company is still trying to play nice with the US. Or it could be the beginning of the end for them. It isn’t clear at this point. I’m going to guess that it’s the latter as US companies are banned from doing business with ZTE. And that likely includes access to the Android OS.

Now, Chinese phonemaker Huawei is in the same boat as ZTE. It will be interesting to see what happens to them.