US Senate seeks to restore ZTE penalties

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ZTE, the fourth largest smartphone vendor in the USA, has been in the news nearly daily since the Commerce Department lifted a stay it placed on a US export ban against the firm.

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 fact that a bipartisan group of senators came together this quickly is a testament to how bad the Trump administration's ZTE deal is and how we will not shy away from holding the president's feet to the fire when it comes to keeping his promise to be tough on China", Schumer said.

All members of ZTE's leadership at or above the senior vice president level also must be terminated, along with any executive or officer tied to the wrongdoing.

The U.S. Commerce Department can exercise discretion in granting exceptions. In early June, the White House announced ZTE would be able to resume buying US parts after it agreed to pay a $1 billion fine and submit to USA oversight. A Republican Senator from Arkansas says that ultimately he "would expect that there wouldn't be a ZTE" and that "the death penalty is an appropriate punishment for their behavior". The coordinator will have a staff of at least six employees funded by ZTE.

Shares resumed trading following a two-month suspension after Washington accused state-owned ZTE in April of reneging on a settlement of charges it violated export rules by selling USA technology to Iran and North Korea.

The Hang Seng Index fell 1.20 per cent, or 377.91 points, to close at 30,725.15.

It also said in filings on Tuesday that it would work to resume operations as soon as possible after the ban gets lifted, and would republish its first-quarter financial results after assessing the impact of the ban and the settlement agreement. This issue has become one of the key problems in a trade war between the two countries.

ZTE, with a market value of about $20-billion before its shares were suspended in April, is the world's No. 4 telecom equipment maker after Huawei Technologies, Ericsson and Nokia. The Commerce Department ban arose from a controversy in which ZTE failed to punish employees who were involved in illegally shipping USA equipment to Iran and North Korea.

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