Congress won’t block Trump’s deal to save Chinese telecom giant ZTE

Lawmakers have reached an agreement to strip a provision from the must-pass defense policy bill that would have sunk President Trump’s deal to save Chinese telecommunications giant ZTE.

Two congressional sources confirmed to The Hill on Friday that the Senate’s tougher language, which would have kept stiff penalties in place including blocking ZTE from buying American components, was booted from the final version of the National Defense Authorization Act (NDAA), which has not been released.  

Instead, the final NDAA is expected to line up with language included in the House’s defense bill, which blocks government agencies from using ZTE or Huawei technology, according to the source.

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Bloomberg first reported that Congress would not use the defense bill to block Trump’s agreement with ZTE. A House Armed Services Committee spokesman declined to comment, citing ongoing negotiations. A spokeswoman for the Senate Armed Services Committee did not immediately respond to a request for comment.

Senators who lobbied hard for using the NDAA to block the agreement immediately blasted the decision from members of a congressional conference committee to strip the provision.

“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 [Jinping] and the Chinese Government the big winners and the American worker and our national security the big losers,” Senate Minority Leader Charles Schumer (D-N.Y.) said in a statement.

Sen. Marco Rubio (R-Fla.) added in a separate tweet that lawmakers “had to cave” on ZTE in order to get tougher language on vetting foreign investments.

That provision seeks to reform the Committee on Foreign Investment in the United States (CFIUS), the interagency panel that assesses national security threats posed by significant investments in U.S. businesses by non-U.S. investors. The reforms are an effort to guard against China accessing sensitive technology.

“So chances that a #China controlled telecomm will not just stay in business, but do so here inside the U.S. sadly just went up,” Rubio said.

Trump’s deal to save ZTE has rattled Capitol Hill, where a bipartisan group of senators got language into their annual defense policy bill that would have effectively blocked the agreement.

The White House warned in a statement last month that it “strongly opposes” the Senate’s ZTE provision, but did not issue a veto threat.

Instead, top White House officials and key GOP allies on Capitol Hill pledged to water down the language during the conference committee.

Language included in the Senate’s initial version of the NDAA would have kept in place stiff penalties slapped on ZTE after it admitted to violating sanctions on Iran and North Korea, including blocking them from buying American components.

Both the Senate and House versions of the bill passed with veto-proof majorities.

The Commerce Department announced earlier this month that it had signed an agreement with ZTE that will help the Chinese telecommunications giant move to reboot its operations.

The signed agreement moves the administration closer to lifting the ban on ZTE, in exchange for the company paying a $1.4 billion fine and embedding a U.S.-selected compliance team in the firm.

But a bipartisan group of senators, including Rubio and Schumer, doubled down after reports of the signed agreement, sending a letter to NDAA negotiators urging them to include the Senate’s language.

Sen. Chris Van Hollen (D-Md.), who crafted the Senate’s language, slammed Republican leadership on Friday as “weak and shameful” for taking the ZTE amendment out of the bill.

“Despite bipartisan support to put American national security before jobs in China, the Republican leadership refused to take any real, substantive action on ZTE,” Van Hollen said in a statement. “Instead, they joined President Trump in bowing to Beijing.”

– Updated at 5:39 p.m.