Hill Continues Push to Keep ZTE Ban After Deal Announcement
Capitol Hill moved forward on legislation aimed at limiting President Donald Trump's ability to lift or otherwise weaken a Department of Commerce-imposed seven-year ban on U.S. companies selling telecom software and equipment to ZTE, despite the department's announcement earlier Thursday it had reached a deal on an alternative punishment. Senate Minority Leader Chuck Schumer, D-N.Y., and other lawmakers blasted the deal or viewed it with skepticism, while other insisted they would need to hear more from the White House. Commerce's Bureau of Industry and Security announced the seven-year ban in April (see 1804170018). Trump faced criticism and threats of legislative action since he first explored lifting the ban last month (see 1805140062, 1805220057, 1805230058, 1805240064 and 1805250059).
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Commerce said it will suspend the ban during a 10-year “probationary period” in exchange for the company's agreement to pay a $1.4 billion fine and other concessions. BIS can reactivate this if ZTE again violates sanctions during its probation, the department said. Commerce said $400 million will be placed in escrow to cover potential future sanctions violations. The company paid $892 million in penalties last year over sanctions violations. The Chinese telecom gearmaker will be required to replace its entire board of directors and senior leadership. It also must allow BIS-selected “special compliance coordinators” to “monitor on a real-time basis” the company's compliance with U.S. export control laws, Commerce said.
The Senate voted 92-4 to invoke cloture on the motion to proceed to the FY 2019 National Defense Authorization Act with ZTE-related provisions, amid bids to attach additional language. Sens. Tom Cotton, R-Ark., and Chris Van Hollen, D-Md., filed an amendment to HR-5515 that would retroactively reimpose the ZTE ban, effectively reversing the deal. The language mirrors an amendment Van Hollen attached to the Senate Banking Committee-cleared Foreign Investment Risk Review Modernization Act (S-2098) that would bar Trump from changing the Commerce ban on U.S. sales to ZTE sans certification to Congress that the company complied with U.S. laws. Schumer touted the Cotton-Van Hollen amendment during a Thursday floor speech.
Sen. Marco Rubio, R-Fla., was among those who pushed to continue pursuing legislation. The issue “is not just ZTE; we have to deal with more than them now,” he told us: “We shouldn't be selling any advanced technology” to other problematic Chinese companies “because they're stealing that stuff from us, they're cheating to get their hands on it. They seek to supplant us.” Communications and trade lobbyists questioned how effective any bill would be at stopping Trump if he's determined to reverse the move.
Sen. John Kennedy, R-La., told reporters he's “very skeptical of what's been done” in Commerce's deal. “I'm not a big ZTE fan,” he said. “They helped Iran and North Korea in violation of our sanctions. They're a little too close for my taste to the Communist Party of China. I wouldn't buy one of their cellphones, but I wouldn't buy one from Huawei, either.” Kennedy said he's “looking forward to learning more about the settlement” but didn't discount supporting legislation to halt the deal.
Other Democrats joined Schumer in opposing the pact. "It is the unanimous conclusion of our nation’s intelligence community that ZTE poses a significant threat to our national security," said Senate Intelligence Committee Vice Chairman Mark Warner, D-Va. "It’s not only that ZTE was busted for evading sanctions on Iran and North Korea, and then lied about it; it’s that ZTE is a state-controlled telecommunications company that poses significant espionage risks, which this agreement appears to do little to address."
The administration "is giving ZTE and China the green light to spy on Americans and sell our technology to North Korea and Iran, as long as it pays a fine that amounts to a tiny fraction of its revenue," said Senate Finance Committee ranking member Ron Wyden, D-Ore. ZTE "has proven itself untrustworthy again and again, yet the Trump administration is moving forward with another slap on the wrist in the grand scheme of things," said Rep. Rosa DeLauro, D-Conn., who co-sponsored language in the House Appropriations Committee-cleared FY 2019 Commerce, Justice and Science appropriations bill that would keep the ban place (see 1805170076).