Senators Move To Reverse Trump's Deal Lifting Sanctions On China's ZTE

Jun 12, 2018
Originally published on June 12, 2018 8:14 am

Days after the Trump administration agreed to restore Chinese telecom firm ZTE's access to its U.S. parts suppliers, a bipartisan group of senators moved to block the deal.

An amendment sponsored by Sens. Tom Cotton, R-Ark., Chris Van Hollen, D-Md., and Chuck Schumer, D-N.Y., added language to the National Defense Authorization Act to reinstate a ban on ZTE buying U.S. components. That sanction was put in place after the Chinese company violated the terms of an earlier agreement to punish it for illegal sales to Iran and North Korea.

ZTE employs 70,000 workers in China and is the fourth-largest vendor of mobile phones in the U.S.

The Senate amendment passed despite late Monday-night lobbying from Commerce Secretary Wilbur Ross, according to The Wall Street Journal.

The vote follows a tumultuous few months for ZTE. In April, the White House announced a seven-year ban on the company buying U.S. parts after it said the company violated U.S. sanctions on trade with Tehran and Pyongyang. After the ban went into effect, ZTE announced its operations had slowed down to nearly nothing because it could not buy vital microchips from American companies, including Qualcomm, based in San Diego.

However, in May, the president tweeted that he was working with China to keep ZTE running and hoped a deal would prevent "too many jobs in China" being lost. In early June, the White House announced the company would be able to resume buying U.S. parts after it agreed to pay a $1 billion fine and submit to U.S. oversight.

Commerce Secretary Wilbur Ross told CNBC at the time that ZTE would replace its management team and board and embed a new department for compliance with the U.S.

The reaction to the move, as NPR's Dustin Dwyer reported, was "swift, negative and bipartisan."

Late Monday, the senators announced they had written language into the defense package that keeps the penalties against ZTE in place. The amendment also bans U.S. government agencies from buying or leasing equipment from ZTE and its Chinese rival, Huawei, and bars U.S. loans to the companies.

Sen. Cotton explained on Twitter that ZTE has extensive ties with the Chinese Communist Party and a record of doing business with North Korean and Iran. He said the threat posed by the mobile phone giant and its rival, Huawei, "is too great to ignore."

Florida Republican Sen. Marco Rubio added that the amendment was "Great news!"

The NDAA is considered a must-pass defense package; Senate Majority Leader Mitch McConnell announced on Monday that it is "the top item on our to-do list. And we'll tackle it this week."

The authorization must pass both houses of Congress.

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