In just a span of a few days after the Trump administration agreed to restore Chinese telecom firm ZTE's access to its U.S. parts suppliers, a bipartisan group of senators are currently moving to block the deal to retain the restrictions on the Chinese firm.
An amendment sponsored by Sens. Tom Cotton, R-Ark., Chris Van Hollen, D-Md., and Chuck Schumer, D-N.Y., added language to the National Defense Authorization Act to reinstate a ban on ZTE buying U.S. components.
ZTE employs 70,000 workers in China and is the fourth-largest vendor of mobile phones in the U.S. While everything seems to be going smoothly, the Senate Amendment passed despite late Monday-night lobbying from Commerce Secretary Wilbur Ross, according to the report of The Wall Street Journal.
The vote comes after an unrestrained few months for ZTE, which was still able to purchase parts from the US suppliers. In April, the White House announced a seven-year ban on the company buying U.S. parts after it said the company violated U.S. sanctions on trade with Tehran and Pyongyang. After the ban went into effect, ZTE has released a statement saying that its operations had slowed down to nearly nothing because it could not buy vital microchips from American companies, including Qualcomm, based in San Diego.
However, in May 2018, the president tweeted that he was working with China to keep ZTE running and hoped a deal would prevent "too many jobs in China" being lost. In early June, the White House announced the company would be able to resume buying U.S. parts after it agreed to pay a $1 billion fine and submit to U.S. oversight.
However, Commerce Secretary Wilbur Ross told CNBC at the time that ZTE would replace its management team and board and embed a new department for compliance with the U.S.
The reaction to the move, as NPR's Dustin Dwyer reported, was "swift, negative and bipartisan."
Fast forward to Monday, June 11, 2018, the senators announced they had written language into the defense package that keeps the penalties against ZTE in place. The amendment also bans U.S. government agencies from buying or leasing equipment from ZTE and its Chinese rival, Huawei, and bars U.S. loans to the companies.
Sen. Cotton explained on his Twitter account that ZTE has extensive ties with the Chinese Communist Party and a record of doing business with North Korean and Iran. He said the threat posed by the mobile phone giant and its rival, Huawei, "is too great to ignore."
The Senate is due to vote as soon as this week on legislation that would block the settlement agreement, included as an amendment to a must-pass defense policy bill.
As part of the order, ZTE must identify in detail to the Commerce Department all Chinese government ownership and control of ZTE, including public and private shares.
The department also will select a monitor, known as a special compliance coordinator, within 30 days to report on compliance by ZTE and its affiliates worldwide for 10 years. The coordinator will have a staff of at least six employees funded by ZTE.
A separate monitor was appointed to a three-year term by a U.S. federal court in Texas last year. Under the deal, ZTE also agreed to allow the U.S. government easier access to verify the company's shipments for items subject to the regulations.
In addition, within 180 days, ZTE must post calculations of the U.S. components in its products on its website in Chinese and English.
ZTE is not allowed to take any action or make any public statement, even indirectly, denying any of the allegations.
