Bipartisan senators urge colleagues to take tough stand on ZTE

Bipartisan senators urge colleagues to take tough stand on ZTE

ZTE display in its headquarters in Shenzhen, China (Photo: ZTE)

WASHINGTON — A bipartisan group of senators has appealed to House and Senate negotiators now hammering out the 2019 defense bill to include the strongest possible restrictions on the sanctions-busting Chinese telecommunications sanctions-busting company ZTE.

The senators urged the negotiators to keep the tougher Senate-passed penalties on ZTE, which would reinstate the April 2018 penalties against the company.

The Senate provision also prohibits the modification of any penalties against ZTE unless certain conditions are met. It also prohibits the U.S. government from using or procuring equipment from, or entering into a contract with ZTE or Huawei, a second Chinese telecommunication entity also considered a security risk.

The appeal to negotiators came one day after the Commerce Department announced Wednesday it had signed a deal with ZTE to take steps on lifting the ban on the company doing business with U.S. companies.

“Allowing ZTE to resume business is a direct betrayal of President Trump’s promise to be tough on China and protect American workers,” Sen. Chuck Schumer (D-NY), the Senate Democratic leader, said Wednesday in a statement to the media. “The administration’s terrible ZTE deal will undermine our national and economic security, which is exactly why the Senate overwhelmingly passed bipartisan legislation to retroactively tear it apart.”

The Commerce Department announced the outline of that deal in June.

“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 Thursday 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.).

House and Senate conferees officially started negotiations Wednesday to reconcile the two version of the 2019 defense bill.

ZTE violated U.S. sanctions to Iran and North Korea, which resulting in the April penalties. 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.

The House version of the defense policy bill does not directly react to a the ZTE deal. However, it does include a ban on government contracting with ZTE, Huawei and other Chinese state-directed firms representing a national security threat by providing the capacity for spying and intellectual property theft.

The Senate amendment was added after the Commerce Department announced in June that it had agreed to lift the penalties against ZTE in exchange for the company paying a $1 billion fine and embedding a U.S.-selected compliance team into the firm.

The White House has said it “strongly opposes” the Senate language, but did not issue a veto threat. Both the Senate and House versions of the bill passed with veto-proof majorities.

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