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Trump, China, ZTE and the art of the deal

For President Donald Trump, foreign pol...

Posted: May 15, 2018 11:18 AM
Updated: May 15, 2018 11:18 AM

For President Donald Trump, foreign policy is all about the deals that are ripe to be done and the powerful men who make them.

So while it seems illogical that someone who won power accusing China of stealing American jobs now wants to save US-sanctioned technology firm ZTE to rescue Chinese jobs, the move is perfectly compatible with his character.

ZTE's fate is evolving into a multi-layered drama that encapsulates tense trade posturing between two economic superpowers that are also locked in high-stakes geopolitical maneuvering over the future of a nuclear North Korea.

It offers fresh insight into Trump's way of doing business, his willingness to flout the norms of presidential governance and his own impulsive behavior -- all of which proved so attractive to voters soured on establishment politics in 2016.

RELATED: Trump throws ZTE curveball as big week for US-China trade begins

Trump has repeatedly stressed the warmth of his friendship with Xi Jinping since he welcomed the Chinese leader to his Mar-a-Lago resort last year and was honored with lavish hospitality during his return visit to Beijing.

The President appears to be betting big that the personal connection can pay off despite the widening gulf between China and the US on trade.

"I think there's a bit of a bromance between President Trump and Xi," said Larry Kudlow, who runs the President's National Economic Council, at an event hosted by Axios on Tuesday, adding that the friendship might even lead to a trade deal.

"Bromances are always a good idea."

But to Trump's critics, the tussle over ZTE offers yet more evidence that he's prone to placing his personal political gain over the national interest, takes profound decisions without regard for the risks and is guilty of hypocrisy.

It's also raising questions about whether Trump's hard line on trade is softening ahead of talks with Chinese negotiators in Washington this week.

"This is quite unprecedented," Michael Hirson, a former US Treasury trade representative to Beijing, told CNN's Richard Quest on Monday, arguing that the President's gambit could mean he is on a different page from his most hawkish advisers on the China trade dispute.

The Trump administration last month banned ZTE, which makes smartphones running Google's Android operating system, from using US technology after accusing it of violating a deal in which it agreed to pay $1.2 billion for evading US sanctions on North Korea and Iran.

Yet on Sunday, out of nowhere, Trump tweeted that "President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!"

Trump posted a follow-up tweet on Monday that was just as staggering, possibly influenced by hours of news coverage about motivation in offering to do the deal:

"ZTE, the large Chinese phone company, buys a big percentage of individual parts from U.S. companies. This is also reflective of the larger trade deal we are negotiating with China and my personal relationship with President Xi."

Why save ZTE?

The case for saving ZTE is that doing so could yield significant concessions in return -- and the United States should use every bargaining chip it has to secure a win in the deepening trade confrontation with Beijing.

Trump also needs China's cooperation, and continued pressure, on North Korea as he prepares for his summit with the isolated state's leader, Kim Jong Un, in Singapore on June 12.

There is also the argument that ZTE is emblematic of the entwined US-China economic relationship, given that thousands of jobs in both countries depend on its survival farther down the high-tech supply chain.

But Trump's intervention on ZTE surprised trade experts because it rejected the principle that trade enforcement decisions should not be used and potentially waived for political reasons -- a bridge other presidents have hesitated to cross.

Avoiding that linkage spares presidents from requests from every foreign leader they meet to intervene in niggling trade disputes.

Politicizing enforcement action also weakens US arguments to foreign governments that the rule of law and good governance are crucial to healthy political systems and regulated interaction between governments.

Further, Trump's hint of concessions on ZTE played into critics' concerns that the President cedes leverage before securing substantial concessions in return -- despite his claim to be the world's best deal-maker.

Characteristically, the President's order seemed to take his own government by surprise. Commerce Secretary Wilbur Ross, who last month accused ZTE of "egregious" violations, was singing a different tune Monday.

"The question is: Are there additional remedies to the one we had originally put forward?" he said at the National Press Club. "That's the area we will be exploring very, very promptly."

Ross also said he wouldn't be surprised if the issue came up in talks with Chinese Vice Premier Lui He in Washington this week.

Looming trade war

The Trump administration is locked in a confrontation with China over alleged intellectual property theft, market access and the size of the Chinese trade surplus with the US, which prompted Trump to threaten $150 billion in import duties on Chinese goods.

But his critics worry that his positioning on ZTE is a first sign of a broader shift.

"He is backing off, and his policy is now designed to achieve one goal: Make China great again," said Senate Democratic leader Chuck Schumer, of New York. "The toughest thing we could do, the thing that will move China the most, is taking tough action against actors like ZTE."

Trump's tweets also exposed him to accusations of inconsistency, since the administration on Sunday warned of possible sanctions against European firms that do business with Tehran after pulling out of the Iran nuclear deal last week.

"The hypocrisy here is staggering," former State Department spokesman John Kirby told CNN's Wolf Blitzer on Monday.

"He has got his new ambassador to Germany out there last week saying German companies that do business with Iran -- we are going to slam ya -- and now we are going to go ahead and just forget the billion dollars of fines that we assigned to that company for selling that technology to both Iran and North Korea."

The ZTE situation could also expose Trump politically ahead of midterm elections in November.

CNN's Cristina Alesci reported on Monday that the administration was seeking concessions from the Chinese government in exchange for easing restrictions on ZTE. A deal could see China remove proposed agricultural tariffs, a Commerce Department official familiar with the discussions said.

Those tariffs, apparently targeted direct at Trump country in Midwestern states, were threatened in response to the President's vow to tax China's imports to narrow the US trade deficit with Beijing.

If agricultural penalties are waived in quid pro quo with ZTE, the White House could face accusations of prioritizing Trump's political fortunes over national security.

Already, some Republicans are accusing the White House of ignoring the concerns of US intelligence agencies that ZTE could be used by Chinese spy agencies to conduct cyber-espionage in the United States.

"Problem with ZTE isn't jobs & trade, it's national security & espionage," tweeted Sen. Marco Rubio, a Florida Republican. "We are crazy to allow them to operate in U.S. without tighter restrictions."

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