Senate Republicans have abandoned an effort to impose harsher restrictions on Chinese telecommunications company ZTE after the US officially lifted its trade ban on the company earlier this month, according to a report from The Washington Post. That means that President Donald Trump’s deal for the company to resume working with US companies will stand, despite significant bipartisan opposition amid worries the company could threaten US national security interests.
Earlier this year, ZTE was found in violation of a plea deal it agreed to last year after it pled guilty to selling US goods to Iran and North Korea. The Commerce Department instituted a trade ban, while the Pentagon banned ZTE and Huawei phones from retail stores on military bases. The US and China then began working toward a deal, spearheaded allegedly by Trump, that would allow ZTE to continue operating, as losing its ability to do business with American companies like Qualcomm threatened to shut down the entire company.
Now, under the new terms, ZTE will no longer be allowed to do business with US government contractors, but it will still be able to conduct business with private US companies. It also paid a $1 billion fine, put $400 million in escrow in order to ensure it does not violate US sanctions in the future, and agreed to replace its board of directors. ZTE will also be monitored by a compliance team chosen by the US for a decade, and it risks a 10-year ban from the US Commerce Department for future violations.
However, senators wanted to impose harsher sanctions that would bar ZTE from doing business with any American companies, as part of a broader defense bill being introduced next week. Apparently, according to Senator Marco Rubio (R-FL), Senate Republicans caved on the ZTE restrictions in order to strengthen an interagency body called the Committee on Foreign Investment in the US, or CFIUS.
This deal on #CFIUS is good news. The bad news? They had to cave on #ZTE in order to get it. 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. #BadTradeoff https://t.co/Bjew7KLaex
— Marco Rubio (@marcorubio) July 20, 2018
“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 and the Chinese government the big winners and the American worker and our national security the big losers,” said Senate Minority Leader Chuck Schumer (D-NY) in a statement given to The Washington Post.
On Twitter, Senator Mark Warner, the vice chairman of the US Senate Select Committee on Intelligence called the move a “huge mistake,” saying it puts the country at risk. “Beyond frustrated that Republican leaders are caving to the Trump Administration’s demands on ZTE. This can only make our country less safe,” Warner wrote.