Senate Democrats Warn Trump Not to Cut a Deal with China on ZTE

enate Minority Leader Chuck Schumer, D-N.Y., explains to reporters how his negotiations with President Donald Trump broke down yesterday as quarreling politicians in Washington eventually failed to keep their government in business, at the Capitol in Washington, Saturday, Jan. 20, 2018. (AP Photo/J. Scott Applewhite)
AP/J. Scott Applewhite

Three Senate Democrats on Tuesday sent a letter to President Donald Trump urging him not to provide relief from sanctions to China’s ZTE Corp, warning that allowing ZTE to continue to purchase American technology could undermine national security.

“Offering to trade American sanctions enforcement to promote jobs in China is plainly a bad deal for American workers and for the security of all Americans,” wrote Senate Minority Leader Chuck Schumer of New York, Senator Sherrod Brown of Ohio, and Senator Ron Wyden of Oregon.

National security “must not be used as a bargaining chip in trade negotiations,” the Senate Democrats wrote.

The President on Sunday announced that he was working on a deal that would lift the crippling U.S. penalties imposed after the Commerce Department found ZTE had sold telephone equipment containing U.S. technology to Iran and North Korea in violation of trade sanctions. The company announced shortly afterward that it had halted its primary business operations as a result.

Trump’s tweet said that he was working with Chinese President Xi Jinping to allow ZTE to “get back into business fast.” The shutdown of ZTE was resulting in “too many jobs in China lost.” It went on to say that he was instructing the Commerce Department to “get it done.”

Sources briefed on the matter told Breitbart News that Chinese officials pressed the ZTE issue during a recent trip by U.S. officials to Beijing. One person familiar with the matter says the Chinese issued an ultimatum, threatening to break off trade talks if ZTE was not given a reprieve from U.S. penalties. Treasury Secretary Steven Mnuchin was one of those officials. In a debriefing that followed the China trip, Mnuchin was among those who advised the president to cut a deal, according to a person briefed on the matter.

China may be particularly sensitive about ZTE because its shutdown highlights how much the country is still dependent on U.S. technology. What’s more, ZTE is a major employer in China. ZTE has more than 70,000 employees worldwide. It supplies networks, equipment, and phones to some of the world’s largest telecommunications companies.

ZTE  purchases chips made by U.S. tech giants such as Qualcomm and Intel. Some of its phones use the Android operating system, which is made by Google. Their role in the president’s decision, if any, remains unclear, although some Capitol Hill lawmakers have privately speculated that they may have pressed the administration to provide relief from the penalties, according to a senior Republican staffer.

ZTE has been a lightning rod for criticism, even apart from its dealings with Iran and North Korea. U.S. officials have argued that the company’s phones and other equipment could be used for espionage by the Chinese government. Just two weeks ago, the Pentagon banned ZTE phones from being sold on military bases because of fears that they posed “an unacceptable risk to Department’s personnel, information, and mission.”

At a hearing on Capitol Hill this year, the head of the FBI and other top U.S. intelligence officials called on American citizens to steer clear of products from ZTE and its larger Chinese rival Huawei. Republican Senator Tom Cotton asked the officials if they would use a ZTE or Huawei phone or advise constituents that doing so was safe. They unanimously indicated they would not.

Criticism of Trump’s offer of relief to ZTE came quickly and from both sides of the aisle on Capitol Hill.

“Our intelligence agencies have warned that ZTE technology and phones pose a major cyber security threat,” Congressman Adam Schiff of California, the ranking Democrat on the House Intelligence Committee, tweeted. “You should care more about our national security than Chinese jobs.”

Senator Marco Rubio, the Florida Republican, tweeted that the “problem with ZTE isn’t jobs & trade, it’s national security & espionage.”

Media allies of the president, including Fox News’s Laura Ingraham and Lou Dobbs, were also critical.

“Hold the line, Mr. President…China has a plan to dominate the world in every major facet of innovation and manufacturing. An overly conciliatory approach merely facilitates China’s ‘Made in 2025’ plan,” Ingraham said.

“Made in China 2025” is China’s national plan to dominate high-tech industries including electric cars, space exploration, telecommunications, and computer chips. In the past, administration officials have pointed to the plan as evidence that China engages in unfair trade practices to further its national economic goals.

“China wins If U.S. Globalists prevail in this so-called ‘bargain’ with ZTE: China will simultaneously gut WH trade initiatives and Trump Iran doctrine,” Dobbs said.

Commerce Secretary Wilbur Ross said at the National Press Club on Monday that his Department would “very, very promptly” begin considering alternatives to the harsh penalties it initially applied to ZTE. He provided no details, however.

The president’s surprising reversal on ZTE has opened the door for his critics to appear more hawkish on the China trade issue than the Trump administration. Schumer, Wyden, and Brown called on the administration to focus on combatting Chinese trade practices that distort global markets.

“Beyond appearing to risk American national security, the statement suggests that the Administration is not serious about addressing the many economic challenges China presents,” they wrote.

In a line that sounded a lot like Trump himself, they wrote: “The devastating effects of China’s trade policies are clear.”

The president defended his ZTE move in a tweet Monday, arguing that easing on ZTE was part of a “larger trade deal.”

“ZTE, the large Chinese phone company, buys a big percentage of individual parts from U.S. companies,” he said. “This is also reflective of the larger trade deal we are negotiating with China and my personal relationship with President Xi.”