US Senate seeks to restore ZTE penalties

US Senate seeks to restore ZTE penalties

Among other things, it would restore penalties on ZTE for violating US export controls and bar USA government agencies from purchasing or leasing equipment or services from the Chinese company.

In April, the White House announced a seven-year ban on the company buying USA parts after it said the company violated US sanctions on trade with Tehran and Pyongyang.

Shares in ZTE Corp. fell 42 percent Tuesday in Hong Kong on their first trading day after the Chinese telecoms equipment maker agreed to pay a $1 billion penalty to the US government and replace its top managers.

Commerce Secretary Wilbur Ross announced a deal last week to lift the ban, which had brought ZTE's factories to a standstill.

Shares in ZTE fell 42 percent in Hong Kong on Tuesday, their first trading day after it agreed to the deal, in which it pays a $1 billion penalty to the USA government and replaces its top managers. The Commerce Department placed additional sanctions on the company after it failed to follow through with its reorganization plan and lied to the USA government about it. Cotton said the president won't veto the bill "because the bill pertains many other critical priorities".

On Tuesday an amendment was made to a Senate defence bill that would repeal the deal, which allowed ZTE to open again in exchange for paying a US$1 billion fine, changing its management and other promises. The department also will select a monitor, known as a special compliance coordinator, within 30 days to report on compliance by ZTE and its affiliates worldwide for 10 years.

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The share falls in Shenzhen and Hong Kong were widely expected. Its Shenzhen shares fell by their 10 per cent limit to 28.18 yuan after it confirmed details of the agreement publicized by the USA government on Monday.

The ban forced ZTE to suspend major operations, and trading in its shares in were halted on 17 April.

The decision to lift the USA ban on ZTE has faced sharp criticism from United States politicians, including from some Republicans.

The case has become a focus of bargaining talks as Washington and Beijing look to avert a trade war.

US lawmakers have attacked the agreement and planned legislation to roll it back, citing intelligence warnings that ZTE poses a national security threat. North Korea is largely dependent on economic ties with China, where leaders had claimed that absent a ZTE deal, the telecom giant would collapse.

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