Republicans Drop U.S. Sanctions On Chinese Telecom Giant ZTE In Concession To Trump

During recent House and Senate negotiations, Republicans voted to drop harsh sanctions imposed on Chinese telecom giant ZTE from the must-pass annual defense bill, favoring President Donald Trump’s softer approach instead.

The company had previously been deemed a threat to national security after it violated U.S. sanctions by illegally shipping products made with U.S. parts to North Korea and Iran. As a result, it faced a seven-year ban that prevented it from buying American products, which are regularly used as components in the company’s production. American companies are estimated to provide 25 to 30 percent of the components used in ZTE’s equipment, which includes smartphones and gear to build telecommunications networks.

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The company was later saved by Trump, who lifted the ban in exchange for the company’s compliance on a number of measures including the replacement of its board and leadership. U.S officials later discovered that the company had lied about complying with U.S demands by failing to replace a number of executive members involved in the incident.

In light of the incident, the Senate’s version of the defense bill called for the reinstatement of the U.S export ban on ZTE as a matter of national security. The company, they argue, has “direct links to the Chinese government and Communist Party. Their products and services are used for espionage and intellectual property theft,” said Sen. Marco Rubio (R-Fla.).

 

The ban did not come to pass however, as lawmakers instead voted to go with the House approach. This places a ban on the government’s purchase of ZTE products as well as  hiring of contractors who use ZTE equipment. But the bill still allows the company to continue to do business with private companies in the U.S. The reconciled version is in line with President Trump’s earlier promise to get the company “back into business, fast.”

The defense bill has received backlash from both sides of the aisle. Republican Sen. Marco Rubio, who co-sponsored the Senate version, expressed his surprise over the decision.

Meanwhile, Senate Democratic Leader Chuck Schumer also disparaged the decision in a recent statement. 

“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 Schumer.