Senate adopts measure blocking Trump ZTE deal

Visitors pass in front of the Chinese telecom giant ZTE booth Feb. 26 at the Mobile World Congress in Barcelona

After violating sanctions in Iran, ZTE was banned from buying parts and components from all American companies.

Chinese telecommunications giant ZTE Corp had about $3 billion wiped off its market value as it resumed trade on Wednesday after agreeing to pay up to $1.4 billion in penalties to the U.S. government. It also required ZTE to change its board of directors and executive team within 30 days. On Wednesday in Hong Kong, they nosedived 40% to their lowest level in more than a year.

"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", Senate Democratic Leader Chuck Schumer said in a statement.

But the bipartisan senate amendment, which has been added to the must-pass National Defense Authorization Act, would essentially kill that agreement by retroactively reinstating financial penalties and continuing the prohibition on ZTE's ability to sell to the USA government.

As part of the order, ZTE must identify in detail to the Commerce Department all Chinese government ownership and control of ZTE, including public and private shares.

Sen. Marco Rubio (R., Fla.) said that Trump's penalties on ZTE are "severe, I don't think there's any debate about that".

The Hong Kong-listed shares of the Chinese telecom-equipment maker dropped about 40% Wednesday, in their first day of trading after a almost two-month suspension.

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

ZTE 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.

The case has become a focus of bargaining talks as Washington and Beijing look to avert a trade war.

Zhongxing Telecommunications Equipment (ZTE) Corporation is a Chinese company headquartered in Shenzhen, Guangdong, China.

The National Defense Authorization Act bill includes language that reinstates prior penalties on the company that bar it from buying USA products - essentially a death sentence.

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