White House aims to kill Senate attempt to re-impose penalties on ZTE

White House officials said Wednesday they’ll try to kill bipartisan Senate legislation re-imposing penalties on Chinese telecom giant ZTE that the Trump administration wants to lift.

The measure was included this week in an annual defense policy bill that’s pending on the Senate floor. Sponsors include Sen. Tom Cotton (R-Ark.), normally a strong administration ally, and others including Marco Rubio (R-Fla.) and Chris Van Hollen (D-Md.).

But a White House statement suggested their legislation violates the Constitution’s separation of powers, and White House legislative director Marc Short said the administration would try to jettison the provision during negotiations between the Senate and House to write a final version of the defense bill. The House version of the defense bill included less far-reaching language on ZTE, a company senators say poses espionage risks to the U.S.

The Commerce Department had announced plans in April to impose penalties on ZTE so harsh that the company said it risked going out of business, after which President Trump announced plans to back off. Instead the administration intends to impose a large fine on the company and require new leaders at the top as well as a team of American experts on-site to verify ZTE is complying with anti-espionage requirements.

Short said in an interview that once lawmakers understood how severe the administration’s current posture actually is toward ZTE they will be satisfied without re-imposing penalties.

“We have not done an adequate job of explaining the sanctions that are being imposed on ZTE. As we do that we are confident that we’ll secure a good outcome in conference,” Short said, referring to the House-Senate “conference committee” that will have to negotiate a final version of the National Defense Authorization Act later this summer.

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In April the Commerce Department announced the telecommunications giant would be banned for seven years from buying critical parts from American firms after the company sold items to Iran and North Korea in violation of a sanctions settlement. The Senate language would re-impose the Commerce Department’s original penalty, along with banning U.S. government agencies from purchasing any devices or services from ZTE or Huawei, another major Chinese telecom firm, or using government loans to subsidize any subsidiaries or affiliates of the two companies.

Cotton re-iterated his commitment to his legislation in a Senate floor speech Wednesday where he repeatedly said ZTE deserves “the death penalty” — penalties forcing it out of business.

“If we weaken sanctions against ZTE we will signal to China and the rest of the world that they can act contrary to our sanctions with impunity,” Cotton said. He later refused comment when asked about the administration’s plans to try to block his language. 

Not all GOP senators support Cotton’s approach. Sen. David Perdue (R-Ga.) spoke on the Senate floor in opposition, agreeing with the White House that it would “trample on the separation of powers.”

“We should not tie the hands of the administration to enact penalties as it sees fit, particularly in these times,” Perdue said. He sought unanimous consent from senators to strike the language from the defense bill, but this was not agreed to. 

“The massive penalties imposed on ZTE are part of an historic enforcement action taken by the Department of Commerce,” White House deputy press secretary Hogan Gidley said in a statement. “This will ensure ZTE pays for its violations and gives our government complete oversight of their future activity without undue harm to American suppliers and their workers. The administration will work with Congress to ensure the final NDAA conference report respects the separation of powers.”

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The back-and-forth over ZTE comes amid other trade-related disputes following Trump’s announcement of harsh tariffs on Canada, Mexico and the European Union and his contentious encounter with U.S. allies at the Group of Seven summit in Quebec last weekend.

Canada’s Minister of Foreign Affairs Chrystia Freeland, on Capitol Hill to meet with members of the Senate Foreign Relations Committee, again denounced the steel and aluminum tariffs imposed by Trump and said retaliatory tariffs from Canada – which she said were “perfectly reciprocal, measured, dollar-for-dollar” – will go into effect on July 1.

“The U.S. has to remove these unfair, illegal tariffs from Canada and its allies,” Freeland told reporters on Capitol Hill.

But despite significant discomfort among GOP lawmakers with the tariffs, an effort by Sen. Bob Corker (R-Tenn.) to attach legislation to the defense bill to give Congress veto power over certain tariffs was shut down by leadership on Tuesday.

Some of Corker’s fellow Republicans expressed irritation Wednesday over the floor speech Corker gave after his amendment was blocked, where he contended that his colleagues were afraid of doing anything to offend Trump because it would amount to “poking the bear.”

“My only point on the Corker situation was that – I didn’t want to see, this is not about, what did he call it, pushing the bear or something? Poking the bear,” Perdue told reporters. “That doesn’t have anything to do with it. I’m an international business guy and what we’re talking about is leveling the playing field, and sometimes you have to get people’s attention to do that and that’s what this president is trying to do.”

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Seung Min Kim and Paul Kane contributed to this report.


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