Senate Challenge to Trump’s ZTE Deal Faces Skepticism

The bid to block the White House’s bailout of the Chinese telecommunications company is picking up steam, but reluctant senators and a suspicious House could still derail the measure.

Senate Intelligence Committee Vice Chairman Mark Warner (left) and Chairman Richard Burr
AP Photo/Andrew Harnik
June 6, 2018, 8 p.m.

Senate opponents of the White House’s bid to grant ZTE a reprieve from crippling U.S. sanctions notched a crucial victory Wednesday, inserting a provision to block President Trump’s deal with the Chinese telecommunications firm into the must-pass National Defense Authorization Act.

But the broader congressional effort to sever the president’s lifeline to ZTE—a company that many lawmakers view as an acute national security threat—still faces several hurdles.

Some powerful Republican senators are expressing doubts over the plan, which requires the White House to certify that the company has not violated U.S. law for at least one year and is fully cooperating with any U.S. government investigation before modifying sanctions. That skepticism raises the prospect that the provision, a separate measure from one barring the use of ZTE products by the Pentagon, could be stripped out or watered down in the coming NDAA debate.

“I think the administration has taken what seems to be appropriate action,” Senate Intelligence Committee Chairman Richard Burr said. “And I give them a tremendous amount of latitude to figure out, out of all their options, what is best for defending this country.”

The provision’s fate in the House is even more uncertain. While several lawmakers said there hasn’t yet been an effort to gauge support in the lower chamber, top Republicans expressed deep skepticism over including language in the NDAA bucking the president’s plan for ZTE.

Rep. Kevin Brady, the chairman of the House Ways and Means Committee and a crucial voice on trade policy, worried that the provision would kneecap Trump’s broader vision for the U.S.-Chinese relationship.

“I absolutely recognize the issues the Senate’s trying to address,” Brady said. “But I also think we need to be cognizant that the president’s negotiating in multiple areas with China—on trade, on North Korea, and others. And so my default is to give him the space to be able to use the diplomatic trade-offs to reach good results.”

And Rep. Mac Thornberry, the chairman of the House Armed Services Committee, said he’s not sure that slapping devastating sanctions on ZTE is the right move. “The issue to me is their relationship with the Chinese government,” Thornberry told National Journal. “And I don’t know that a sanction is going to fix that.”

Before Trump unexpectedly announced a reprieve, ZTE—one of the largest providers of mobile phones in the world—faced imminent destruction. In April, the Commerce Department accused ZTE of violating a ban on selling equipment to Iran and North Korea and lying to the government after being caught, barring the Chinese firm from purchasing any equipment from American companies.

ZTE relies heavily on exported U.S. hardware to build its products, and most analysts believed the company would not survive without the ability to make those key purchases.

But in an unexpected tweet last month, Trump said he directed the Commerce Department to reverse the sanctions and was working with Chinese President Xi Jinping to bail out ZTE. “Too many jobs in China lost,” the president wrote, suggesting that ZTE’s fate was tied to broader trade negotiations with China.

On Tuesday, Reuters reported that ZTE had signed a preliminary deal with the U.S. government to lift the ban.

The move incensed lawmakers from both parties, many of whom have long sounded the alarm over ZTE’s cozy relationship with the Chinese government. Senators with top-level security clearance have routinely warned that ZTE’s operations in the United States put the country’s national security at risk, suggesting that the mobile-phone manufacturer is feeding sensitive information scraped from its products back to Beijing.

“It’s either a national security concern or it’s not,” Sen. Mark Warner, the ranking member of the Senate Intelligence Committee, told reporters this week. “It’s not something we use as a trading chip in an on-again, off-again trade war.”

Lawmakers in the House first moved to block the White House’s attempt to lift sanctions on ZTE, unanimously passing a provision out of the House Appropriations Committee on May 17 that would prevent the president from scrapping penalties against the Chinese firm. The Senate Banking Committee followed suit with a May 22 amendment spearheaded by Chris Van Hollen. Identical language was inserted into the Senate’s NDAA text Wednesday.

Speaking to reporters, Van Hollen said he believes the House will accept the ZTE language in the Senate’s NDAA. “The question is whether we refine it at all, given the developments that the White House has talked about,” he said, alluding to discussions lawmakers have had with Trump’s staff over the details of the plan.

The NDAA is likely to pass the Senate with a veto-proof majority. But skepticism still persists in some corners of the Senate over the ZTE provision, and that could work to weaken that language during debate on the critical defense bill.

“The ZTE thing is so much more complicated than Van Hollen is talking about,” said Sen. David Perdue, a member of the Armed Services Committee. “And if you tie the president’s hands in that regard, I think it puts him in a real weak position dealing with some of these … regimes.”

While Burr agrees that ZTE represents a national security threat, he believes the White House deal—which reportedly comes with strict oversight and restrictions on ZTE’s activities—may be the best way to keep that threat contained.

“What happens to ZTE if they close?” Burr said. “Does the company and the technology just go away? No, it probably doesn’t. It comes out under another name, with no U.S. supervision, with no embedded U.S. employees.”

And other senators suggested that Capitol Hill may not have the bandwidth to challenge President Trump on both ZTE and the new White House tariffs levied against Canada, Mexico, and Europe.

“I’ve been involved in a ton of other issues over recess, but ZTE is one that concerns me,” said Senate Foreign Relations Committee Chairman Bob Corker. “We’ll see what the right policy is on that. Right now we’re working on the tariff issue, and trying to figure out a way to pull that back to Congress.”

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