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ZTE in jeopardy again as Senate defies Trump with potential new ban

Wang Zhao  AFP  Getty Images The ZTE logo is seen on a building in Beijing

The telecom company is considered by the intelligence community to be a mechanism for espionage by, in part, selling phones in the USA that can be tracked and enabled to steal intellectual property.

There is also a risk that the Trump administration's move to lift the ban on ZTE could be undercut by Congress. Google vows it won't use AI for weapons MORE (Md.) objected to Perdue's request, paving the way for the provision blocking Trump's ZTE deal to remain in the defense bill.

But the ban on buying US parts, imposed by the department in April, will not be lifted until the company pays the fine and places $400 million more in escrow in a USA -approved bank, the agency said.

The bipartisan amendment would reimpose penalties on ZTE for violating US sanctions against exporting to Iran and North Korea that the Trump administration sought to lift in exchange for the company paying a $1 billion fine and funding an in-house compliance team of USA officials. Reuters on Tuesday revealed that ZTE had signed a preliminary agreement with the Commerce Department. ZTE then ceased major operations.

Under the terms of the DoC's previous deal, ZTE would have been forced to pay an additional $US1 billion in fines (on top of the $US900 million it already paid) and place another $US400 million in escrow to cover potential future penalties.

The Trump administration announced late last week that it had reached a deal to lift penalties against the company in exchange for ZTE paying a $1 billion fine and embedding a US -selected compliance team in the firm.

But a number of United States lawmakers aren't satisfied with that agreement, saying the issue extends beyond punishment and is more about national security.

The U.S. Commerce Department can exercise discretion in granting exceptions. The coordinator will have a staff of at least six employees funded by ZTE. Lifting the sales ban on ZTE was a key demand China made in the broader trade talks with the avert a trade war between the world's two-largest economies. Although $1.4 billion is not a small amount of money, it sets the stage for other companies to also violate trade laws under the assumption that, at worst, they'll have to pay a hefty fine. ZTE is not allowed to take any action or make any public statement, even indirectly, denying any of the allegations.