Donald Trump Lifting Sanctions On ZTE, But China Tech Firm’s Phones Pose ‘Security Risk,’ U.S. Military Says

Chinese company was sanctioned for selling phone technology to Iran and North Korea, but Trump now says he will help the firm 'get back into business.'

Donald Trump, ZTE, Trump lifts sanctions, Steele dossier, security threats
Thomas Peter / Getty Images

Chinese company was sanctioned for selling phone technology to Iran and North Korea, but Trump now says he will help the firm 'get back into business.'

Donald Trump on Sunday took to his Twitter account to announce that had “instructed” the United States Commerce Department help the Chinese phone-making giant ZTE “get back into business” after U.S. sanctions forced the tech firm to shut down in April of this year.

The company was slapped with sanctions by the U.S. for selling phones to Iran and to North Korea. In addition, the Defense Department calls ZTE phones a “security risk” to U.S. service members, and banned the company’s phones from sale in any retail outlet on a military base. The military ban on ZTE phones was imposed on May 3, just nine days before Trump’s announcement that the U.S. would help the company get back into business — a move that would likely entail lifting sanctions against ZTE.

In 2012, the House Intelligence Committee issued a report saying that ZTE phones, and phones made by another Chinese tech firm, Huawei, were likely used by the Chinese government to spy on Americans, including business leaders, government officials and members of the military. Though both companies denied the allegations, in February of this year top U.S. intelligence officials told the Senate Intelligence Committee that they had “deep concerns” about security risks posed by phones from the two Chinese companies and other firms which the officials described as “beholden to foreign governments.”

ZTE — Zhongxing Telecommunication Equipment Corporation — is the world’s fourth-largest smartphone manufacturer.

Donald Trump, ZTE, Trump lifts sanctions, Steele dossier, security threats
The Chinese firm ZTE said it had shuttered operations due to U.S. sanctions. Miquel Benitez / Getty Images

Adam Schiff, the ranking Democrat on the House Intelligence Committee condemned Trump’s move to lift sanctions on ZTE, taking to his own Twitter feed to respond to Trump, saying, “Our intelligence agencies have warned that ZTE technology and phones pose a major cyber security threat. You should care more about our national security than Chinese jobs.”

Trump’s announcement that he planned to help resurrect ZTE also came after trade talks in China earlier in May — talks at which Chinese officials implored the U.S. to ease the sanctions against ZTE, according to a Reuters news agency report.

The announcement also comes less than a week after Trump announced that the U.S. would withdraw from the Iran nuclear deal and instead impose severe new sanctions against Iran. But ZTE paid a record $900 million in fines over selling smartphone technology to Iran last year, making Trump’s effort to help the company appear inconsistent with his new emphasis on economic and business sanctions on Iran.

Trump did not announce the precise reason for his reversal on ZTE sanctions, saying only “Too many jobs in China lost,” in the Twitter message that posted shortly after arriving at Trump National Golf Course in Virginia on Sunday.

But in the “Steele Dossier,” the private intelligence document assembled by former British spy Christopher Steele that alleges Trump’s deep ties to Russia, Steele also says that Trump’s financial ties to China may be even deeper more “corrupt” than his dealings in Russia, and may even involve bribery.

“ZTE pleaded guilty last year to conspiring to violate U.S. sanctions by illegally shipping U.S. goods and technology to Iran and entered into an agreement with the U.S. government,” Reuters reported on Sunday. “The ban (on doing business with ZTE) is the result of ZTE’s failure to comply with that agreement.”

But a Washington D.C.-lawyer for several of ZTE’s U.S. suppliers said that reversing the sanctions on the Chinese tech giant won’t be as simple as Trump makes it sound.

“This is a fascinating development in a highly unusual case that has gone from a sanctions and export control case to a geopolitical one,” Douglas Jacobson told Reuters. “There’s no legal mechanism for this. How this will play out remains to be seen. They are not simply going to be able to resume business as usual”