WASHINGTON — Congressional negotiators working on the 2019 defense bill have backed away from a possible confrontation with President Donald Trump over Chinese telecommunications company ZTE, opting Friday for a slap on the wrist for the sanctions-busting company.
According to reports, the negotiators have chosen the House version of ZTE punishment, which is excluding the company from any U.S. government contracts. That approach permits ZTE to do business with private entities in the United States and also permits a deal hammered out by the White House to rescue the firm to remain in place.
The Senate approach would have restored the ban on ZTE having any business in the United States as well as paying fines imposed earlier this year.
“By stripping the Senate’s tough ZTE sanctions provision from the defense bill, President Trump — and the Congressional Republicans who acted at his behest – have once again made President Xi and the Chinese Government the big winners and the American worker and our national security the big losers,” Sen. Chuck Schumer (D-NY), the Democratic leader, said in a statement Friday.
“The administration’s backtrack on ZTE is another example of the president being weak in the face of another nation’s leader while Republicans just follow along,” Schumer said. “President Trump has once again broken his core promise to be tough on China simply to please the president of China – and he got nothing in return.”
Trump had asked negotiators to go easy on ZTE but did not threaten to veto the $717 billion defense bill. Both chambers passed their versions of the defense bill with wide veto-proof margins.
The decision by Republican negotiators rebuked a bipartisan congressional plea to be tough on ZTE, which is one of at least two Chinese telecommunications firms called national security risks by U.S. intelligence agencies.
“We strongly oppose the June 2018 deal with ZTE negotiated by the Commerce Department’s Bureau of Industry and Security (BIS) to lift the seven-year ban against the export of U.S. parts and components to ZTE,” the senators wrote in a letter July 12 to the chairmen and ranking members of the House and Senate Armed Services committees.
The letter was signed by Sens. Marco Rubio (R-Fla.), Chris Van Hollen (D-Md.), Tom Cotton (R-Ark.), Mark Warner (D-Va.), Roy Blunt (R-Mo.) and Bill Nelson (D-Fla.).
“Chances that a China controlled telecom will not just stay in business, but do so here inside the U.S. sadly just went up,” Rubio said in a tweet Friday.
In March 2017 the Commerce Department determined that ZTE had “conspired to evade” U.S. sanctions against Iran and North Korea by selling the countries US-made hardware and software. As a result, ZTE was fined $1.2 billion.
In April 2018 the Commerce Department prohibited ZTE from purchasing U.S-.made technology after it determined it was not complying with the plea agreement made in March 2017 on the sanctions busting. Commerce also blocked ZTE from buying parts from U.S. firms for seven years.
Additionally, ZTE, Huawei and other Chinese state-directed firms have been deemed national security threats by providing the capacity for spying and intellectual property theft, according to testimony to Congress from the intelligence community.
However, the Trump administration declared in June that ZTE could resume purchasing U.S. parts if the company paid a $1.4 billion fine, shifted its management board and officers, and brought in a U.S-selected team of monitors.