Congress Seen Having Options to Limit Trump Actions to Weaken ZTE Ban

Senate Republicans continue to split on how much leeway to give the White House to reconsider the ZTE ban, with Sen. Marco Rubio, R-Fla., among those most opposed to any shift. “If the ZTE issue is not addressed properly, I think you're going to see a bipartisan effort to pass veto-proof legislation,” he told us. Rubio noted perceptions administration officials aren't cohesively advising Trump on how to handle ZTE. “Some of the people at the White House understand exactly what the problem is” and are advising against lifting the ban, while others support making an alternate punishment a possible condition in U.S.-China trade talks, Rubio said. He expanded his criticism during a Wednesday floor speech. “This is not a game,” Rubio said. “Get rid of the short-term thinking and start thinking that our competitor has a 50-, 75- and 100-year plan. We don’t even know what we’ll be talking about next week.”

Senate Commerce Committee Chairman John Thune, R-S.D., told us he's “carefully following what's going on at the White House” on ZTE but isn't ready to take further action. “I'm of the school that we'll wait and see what role Congress might play in all of this after we see what the administration does,” Thune said. “I hope they are very cautious in how they proceed.” ZTE is “already an organization that's been fined for violating sanctions with Iran and North Korea” so “we shouldn't view them as trustworthy,” he said. Thune and Senate Majority Whip John Cornyn, R-Texas, were among a group of senators who sent a letter to Trump administration officials warning against softening the ZTE sanctions and loosening export controls for China as they consider how to narrow the bilateral trade deficit (see 1805230076).

House Communications Subcommittee Chairman Marsha Blackburn, R-Tenn., told us she believes the Hill can “work through” its concerns without legislation for now. Commerce's ban “was appropriate,” as were previous Hill actions targeting ZTE and fellow Chinese telecom equipment firm Huawei, she said. “We'll continue to talk with Commerce, the White House and with others involved to make sure that we protect our critical infrastructure here” and “deal appropriately” with companies “who are reverse engineering … or embedding spyware into their hardware and software” aimed at U.S. consumers. House Commerce Committee Chairman Greg Walden, R-Ore., told us he's closely watching the White House's actions. “We all care about the supply chain” and how ZTE affects the national security of U.S. telecom networks, he said.

House Homeland Security Committee Chairman Michael McCaul, R-Texas, and Rep. Joaquin Castro, D-Texas, meanwhile, warned Trump on his ZTE plans. “Lifting these penalties that were instituted after a law enforcement process would undermine the credibility of [U.S.] sanctions and permit ZTE, an entity with ties to Chinese military and intelligence agencies, access to U.S. components and technology, which would pose a risk” to national security, the lawmakers wrote.

In the Senate

Senate Democrats aim to charge ahead with S-2098 and other bills aimed at forestalling a White House reversal on ZTE. Senate Banking ranking member Sherrod Brown, Ohio, and Richard Blumenthal, Conn., told us they actively will push for the bill's language to be attached to the FY 2019 National Defense Authorization Act. Communications Subcommittee ranking member Brian Schatz, D-Hawaii, also on Senate Banking, told us he views the ZTE amendment to S-2098 as “an important step in terms of the process of reversing” Trump's attempt. “Whether this causes [Trump] to allow the Commerce Department to function independently or whether we have to actually overrule his thumb on the scale by statute, one way or another this should lead” to an end to the controversy, Schatz said.

Brown sees NDAA as a strong vehicle to bring S-2098 to the floor amid concerns Senate GOP leaders may attempt to delay legislative action and give the Trump administration some leeway on ZTE. “There's too many voices at the White House going in too many different directions for them to get a coherent policy,” Brown said: ZTE “lied repeatedly to the U.S. government and to others” and presents a national security threat, which means “we penalize them and no backing off” as part of a trade deal.

Sen. Mike Rounds, R-S.D., told reporters he will be strongly supporting S-2098. He believes Senate Banking's 23-2 vote on the ZTE amendment “sends a message” about the views of the majority of the Senate GOP caucus.

The House cleared on a voice vote Wednesday an amendment to its version of the NDAA bill (HR-5515) that would prohibit federal agencies from contracting or buying Huawei or ZTE products. HR-5515 already included provisions barring any U.S. government agency from using “risky” technology produced by Huawei or ZTE. The House Rules Committee ruled against allowing floor votes on four other proposed amendments aimed at limiting Trump's ability to act on ZTE. House Armed Services Committee Chairman Mac Thornberry, R-Texas, strongly opposed using the NDAA to alter the ZTE ban at the committee level.

Trump's Actions

S-2098 appears to be the strongest bill at the moment aimed at preventing a ZTE reversal, but even if it fails to get a floor vote the legislative push and Hill general reaction to Trump's actions over the past two weeks is effective, said American Enterprise Institute resident scholar Derek Scissors. “Congressional interference has already put pressure on the administration,” he said. “They have expressed that they've felt pressure, they've changed their spin.” He cited Trump's public denial he had agreed to the broad outlines of a deal with the Chinese government that would lift the outright ban and replace it with a combination of a sizable fine, governance changes and other concessions.

“The political winds in Washington have made it very difficult for Trump to be able to deliver on his promise to bring a reprieve to ZTE,” said Center for Strategic and International Studies Technology Policy Program senior fellow Samm Sacks. “There's enormous opposition” from multiple different camps “that are just going to make this deal almost impossible,” she said. The Hill backlash mixed with “a tremendous amount of in-fighting within Trump's inner circle” over ZTE and related China policy issues, she said. The strength of the public backlash stems from lawmakers and others conflating Trump's bid for a ZTE reversal with several different existing federal processes aimed at curbing Chinese telecom companies, including the FCC's national security NPRM (see 1804170038), Sacks said.

Scissors and Sacks cautioned against automatically pushing to attach the bill's language to NDAA. “You can easily just bring up” S-2098's ZTE language “as a separate bill,” Scissors said. “I don't think there is as much bipartisan consensus around” using NDAA to deal with ZTE, Sacks said. “There are definitely people in Congress who want to take a more thoughtful, precise approach and understand that tucking a sweeping ban into NDAA is not the most constructive way to do it.” There's conversely “a consensus that this is a national security issue and ICT supply chains are vulnerable to espionage risks,” she said.