ZTE allowed to temporarily resume some US business

US considers ending seven-year ban, Bloomberg reports.

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Chinese phone maker ZTE could be back in business in the US.

Johannes Eisele / AFP/Getty Images

The Trump administration will let ZTE resume some business activities temporarily while it considers ending a seven-year ban against the embattled Chinese phone maker.

The authorization (see below), issued by the Commerce Department's Bureau of Industry and Security, grants a waiver to some companies doing business with ZTE from July 2 until Aug. 1. It wasn't immediately clear when a permanent order might be issued, but the company is expected to be in compliance with US demands by Aug. 1, a person familiar with the matter told Bloomberg.

ZTE, the fourth-largest smartphone maker in the US, has been dealing with a US Commerce Department denial order that prevents American businesses from selling hardware or services to the company. The seven-year ban forced ZTE to shut down its "major operating activities." The ban followed the government's determination that ZTE violated terms of a 2017 settlement by failing to fire employees involved with illegally shipping US equipment to Iran and North Korea.

The Commerce Department cautioned that the denial order is still in place and that the waivers allow for limited activity, such as maintaining and supporting existing networks or equipment. It doesn't authorize new business with ZTE, the department said.

ZTE had been working to get the denial order overturned and had pegged its hopes on broader bilateral trade talks between the US and China. ZTE seemingly had little hope of survival until President Donald Trump tweeted that he was pushing the Commerce Department to work with ZTE to remove the ban -- an unprecedented move by a US president to countermand one of his own departments. 

Members of Congress on both sides of the aisle criticized Trump's tweet as irresponsible, prompting him to defend his position with yet another tweet. ZTE, he said, "buys a big percentage of individual parts from U.S. companies." He also said ZTE was "reflective of the larger trade deal we are negotiating with China and my personal relationship with President Xi."

The Commerce Department struck a deal last month in which ZTE would pay a $1 billion penalty to resume business with US suppliers. In a rebuke of Trump's efforts though, the Senate voted to reinstate the sanctions as part of a military spending bill, setting the stage for a fight with the White House.

Before the Senate bill can become law, it must first be reconciled with one that doesn't include the ZTE provision. It was passed by the House of Representatives and then signed by Trump.

ZTE has become a critical part of the broader discussions between China and the US, the two largest economies in the world, over trade tensions. A trade war could involve billions of dollars' worth of tariffs.

ZTE didn't immediately respond to a request for comment.

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