ZTE back in business after Congress backs off amendment

ZTE sign
The move ends a saga that began when the U.S. announced a seven-year ban on the company for the trade infractions. (Flickr user Karlis Dambrans)

ZTE is back on the right side of the U.S. government—and therefore back in business—as an amendment that would have reinstated a ban against U.S. companies selling equipment to the vendor will not be included in the National Defense Authorization Act.

The Chinese firm had been hit with sanctions for illegally shipping products to North Korea and Iran. President Trump had lifted those sanctions earlier this month. The drama last week was whether a bipartisan amendment reinstating the sanctions, which were a death sentence to the company, would be included in the final defense bill.

The amendment, which was had bipartisan backing by Sens. Marco Rubio, R-Fla., Tom Cotton, R-Ark., Chuck Schumer, D-N.Y., and Chris Van Hollen, D-Md., was dropped.

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Draft language from the House included a procurement ban for ZTE products. The Senate wanted to reinstate a ban on U.S. companies selling equipment to ZTE. The Trump administration "strongly opposed any efforts by Congress to block its deal for ZTE to resume business," Bloomberg reported. The procurement ban remains in the legislation, which will be voted on this week.

The move ends a saga that began in April when the U.S. announced a seven-year ban on the company for the trade infractions. ZTE said that the move would cause it to shut down. In May, Trump said he was reconsidering the move as a favor to Chinese president Xi Jinping. The Bloomberg story on the decision to back Trump's lifting of sanctions places the move into the bigger context of Chinese/U.S. relations.

The replacement penalties are a fine, management changes and high level security guarantees. The Commerce Department earlier this month lifted the sanctions when ZTE put $400 million in escrow at a U.S. bank. That was the last installment of a $1.4 billion penalty.

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The failure to reinstate the stronger sanctions led to unhappy faces on both sides of the aisle. "Despite bipartisan support to put American national security before jobs in China, Republican leadership refused to take any real, substantive action on ZTE. Instead, they joined President Trump in bowing to Beijing. It’s weak and shameful," Van Hollen said in a statement.

Rubio, referring to comments by National Economic Council director Larry Kudlow on CNBC and in a Washington Post story, was even more pointed on Twitter: "Xi Jinping has no “intention of following through” on discussions held this year between the two countries & has “not responded at all” to U.S. demands to stop stealing American trade secrets. So lets allow #ZTE to stay in business and keep stealing???????"

On Tuesday, Treasury Secretary Steven Mnuchin and Congressional Republicans agreed to bolster the review process for the Committee on Foreign Investment in the U.S. In another tweet, Rubio lauded that move but said that Congress "had to cave on #ZTE in order to get it."