The U.S. and China have agreed on the broad terms of a deal to lift an American sales ban on a Chinese telecom giant, as the two countries work to deescalate trade tensions brought on by the threat of tariffs, according to a report Monday night.
Under the agreement as it stands, the Trump administration would rollback a seven-year prohibition imposed on U.S. companies selling to ZTE in exchange for ZTE making changes to its management and board of directors, as well as possibly paying hefty fines, American and Chinese sources told the Wall Street Journal.
As part of the arrangement, Beijing reportedly offered to remove billions of dollars in tariffs on U.S. farm products, although one person said the White House didn’t appear to match their proposal.
“The White House was meticulous in affirming that the case is a law enforcement matter and not a bargaining chip in negotiations,” a source told the WSJ.
Specific details are still being mapped out and the outline could well unravel, per the WSJ.
The ban was put in place after ZTE violated Iranian and North Korean trade sanctions. In order to be walked back, the deal will need to pass U.S. national security reviews, one source told the WSJ.
Treasury Secretary Steven Mnuchin told CNBC Monday that U.S. intentions were never to harm ZTE.
“The intent was not to put the company out of business,” Mnuchin said.
On Sunday, Mnuchin also confirmed that conversations about ZTE were “completely independent” from the ongoing tariff dispute between the U.S. and China because they concerned enforcement rather than trade.
“We didn’t agree to any quid pro quo,” he told Fox News. “And I’m not going to go through the discussions on the enforcement issue.”
President Trump tweeted on May 13 that he was working with Chinese President Xi Jinping to unwind the ZTE prohibition.
