Senate blocks ZTE deal in rebuke of Trump deal

ZTE: File photo
ZTE: File photo Copyright Reuters
Copyright Reuters
By Leigh Ann Caldwell and Marianna Sotomayor with NBC News Politics
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The move comes less than a week after the president entered into an agreement with telecom giant.


WASHINGTON — In a major rebuke to President Donald Trump, the Senate has adopted a measure that would block the administration's deal with Chinese telecom giant ZTE, pitting the president against Congress on what many senators say is an issue of national security.

The Senate's move comes less than a week after the administration struck an agreement with ZTE that would have kept the telecom company engaged in the U.S. market.

The president's deal with ZTE would have forced the company to pay a $1 billion penalty, reorganize its company and allow U.S. compliance officers in exchange for being able to sell its products inside the U.S.

But the bipartisan senate amendment, which has been added to the must-pass National Defense Authorization Act, would essentially kill that agreement by retroactively reinstating financial penalties and continuing the prohibition on ZTE's ability to sell to the U.S. government.

Sen. Tom Cotton, R-Ark., who is one of the co-sponsors of the measure, said that the amendment would likely put ZTE out of business.

"ZTE said they couldn't remain in business, or at least not remain anything other than a cell phone hand-held business, if the denial order from March was in effect. And this would essential put the denial order back into effect," Cotton told reporters.

The telecom company is considered by the intelligence community to be a mechanism for espionage by, in part, selling phones in the U.S. that can be tracked and enabled to steal intellectual property.

The U.S. slapped sanctions on ZTE in 2016, prohibiting the company from doing business in the U.S. for seven years, when it violated U.S. sanctions against Iran and North Korea. The Commerce Department placed additional sanctions on the company after it failed to follow through with its reorganization plan and lied to the U.S. government about it.

A bipartisan group of senators praised the amendment, saying it protects the U.S.'s national security.

"The fact that a bipartisan group of senators came together this quickly is a testament to how bad the Trump administration's ZTE deal is and how we will not shy away from holding the president's feet to the fire when it comes to keeping his promise to be tough on China," Senate Democratic Leader Chuck Schumer said in a statement.

The amendment was added just as Commerce Secretary Wilbur Ross was on Capitol Hill briefing senators about a component of the president's ZTE deal. Sen. John Cornyn, R-Texas, left the meeting saying he was supportive of the Senate's effort.

The NDAA still has to pass the Senate and the House of Representatives must still agree to the defense bill with the measure included before it can advance. The president would then face a choice: Veto a critical defense bill to save the ZTE deal or allow the administration's deal to collapse. Sen. Cotton said the president won't veto the bill "because the bill pertains many other critical priorities."

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