Senators Introduce Measure to Reverse Trump Administration’s ZTE Deal

Republican and Democratic Senators have finally found common ground in an unusual place: reversing a Trump administration trade policy they say is too easy on China.

A bipartisan group of Senators Thursday introduced legislation to unwind a deal the White House struck with Chinese telecom giant ZTE. The legislation would restore penalties on ZTE for violating U.S. sanctions against Iran and North Korea and block U.S. government agencies from purchasing equipment or services from ZTE or its bigger Chinese rival, Huawei Technologies.

The bill was introduced by Senator Chris Van Hollen, the Maryland Democrat, with backing from Senate Minority Leader Charles Schumer and Republican Tom Cotton of Arkansas. Republican Senators Marco Rubio and Susan Collins are co-sponsors, as are Democrats Richard Blumenthal and Bill Nelson.

The Senators plan to attach the measure to the National Defense Authorization Act, a piece of legislation considered a “must-pass” item that is set to be voted on in the coming weeks.

The measure was introduced hours after Commerce Secretary Wilbur Ross announced that the U.S. had agreed to lift the seven year ban on U.S. companies selling components and software to ZTE. That ban had effectively put ZTE out of business. In its place, Commerce has levied $1.4 billion in fines and penalties, required the replacement of the company’s senior management and board, and will install compliance officers inside the company.

Both Senators Rubio and Schumer, who have been sharply critical of the administration’s plans to ease the penalties on ZTE, attacked the deal Thursday.

I assure you with 100% confidence that #ZTE is a much greater national security threat than steel from Argentina or Europe. #VeryBadDeal

— Marco Rubio (@marcorubio) June 7, 2018

.@realDonaldTrump should be aiming his trade fire at China, but instead he inexplicably aims it at allies like Canada, Mexico and Europe. When it comes to China, despite his tough talk, this deal with ZTE proves the president just shoots blanks. https://t.co/Kaqf3KfKbN

— Chuck Schumer (@SenSchumer) June 7, 2018

The U.S. government has long been concerned with possible national security threats posed by ZTE and Huawei. In May, the Pentagon banned ZTE and Huawei products from being sold on military bases.

The White House did not immediately react to the proposed legislation, prompting some on Capitol Hill to speculate that it may actually welcome the legislation.

“This could actually be a gift to the Trump China hawks,” one person familiar with the matter said. “Trump gets credit from China for being reasonable but he can point to the law as tying his hands. It takes the issue off the table.”

Others expect Trump to push back against the legislation.

“This was a deal that Trump agreed to make with Xi. He’s not going to be happy watching the Senate try to undermine him,” a former administration official said.