The move would allow stalled trade negotiations with China to move forward, but is also likely to provoke an intense backlash on Capitol Hill.
WASHINGTON — The Trump administration has told lawmakers it has reached a deal that would keep the Chinese telecom firm ZTE alive, a person familiar with the matter said. The move could allow trade negotiations with China to move forward, but would probably provoke an intense backlash in Congress.
Under the agreement brokered by the Commerce Department, ZTE would pay a substantial fine, hire American compliance officers to be placed at the firm and make changes to its current management team.
In return, the Commerce Department would lift a so-called denial order that is currently preventing the company from buying American products, the person said.
The move would allow ZTE to once again begin doing business with American companies, including Qualcomm, the chipmaker based in San Diego that is a key ZTE supplier. The Chinese company was recently banned from buying American technology components for seven years as punishment for violating United States sanctions against Iran and North Korea.
The administration has been eager to reach a deal on ZTE in exchange for trade concessions from China, including purchases of agriculture and energy products. Officials are poised to announce the compromise deal soon, perhaps as early as Friday.
Such an agreement would probably face fierce resistance on Capitol Hill, where top lawmakers, including Senator Chuck Schumer of New York, the Democratic senate leader, and Senator Marco Rubio, Republican of Florida, have urged the administration not to bend on ZTE, which they consider a law enforcement and national security issue. The House on Thursday passed a bill that would prevent the administration from cutting a deal with ZTE.
On Tuesday, President Trump denied that the administration had already reached a deal with ZTE, but seemed open to the possibility of fining the company and enforcing management changes, instead, remarking that ZTE’s purchases of American products also supported American jobs.
The Chinese telecommunications firm has been on the brink of shutting down, following penalties imposed by the Commerce Department in April that severed important links in its supply chain. The Chinese government had made clear that lifting ZTE’s penalty would be a condition for continuing with trade talks, and that if the penalty was not lifted, American companies operating in China might face further retaliation.
On Thursday, Wilbur Ross, the commerce secretary, said the administration was considering installing a compliance team inside ZTE. “We’re developing a matrix of things and while we haven’t come quite to a final decision yet, we think there may very well be an alternative that will be quite punitive to them, but really modify behavior,” Mr. Ross said in an interview with CNBC on Thursday.
