FILE - In this May 8, 2018, file photo, a woman passes by a ZTE building in Beijing, China. Chinese tech giant ZTE Corp.'s chairman promised no further compliance violations and apologized to customers in a letter Friday, June 8, 2018, for disruptions caused by its violation of U.S. export controls, a newspaper reported. (AP Photo/Ng Han Guan, File)

Senate bill would block WH deal with Chinese telecom company

June 18, 2018 - 4:53 pm

WASHINGTON (AP) — The Senate is set to pass a defense policy bill that includes a pay raise for the military, but would block a White House plan to allow Chinese telecom giant ZTE Corp. to buy component parts from the U.S.

The Chinese company is accused of violating trade laws by selling sensitive technologies to North Korea and Iran. The Trump administration announced a deal with ZTE earlier this month, but Senate leaders have sought to reverse it by tucking a provision into the must-pass defense package.

The Commerce Department barred ZTE in April from importing American components for seven years after concluding that the company deceived U.S. regulators after settling charges last year of sanctions violations. Instead of disciplining all employees involved, ZTE had paid some of them full bonuses and then lied about it, Commerce said.

The decision amounted to a death sentence for ZTE, which relies on U.S. parts. The company quickly announced that it was halting operations. The ban also hurt American companies that supply ZTE.

But earlier this month, the U.S. and China reached a deal that allows ZTE to stay in business in exchange for paying an additional $1 billion in fines and agreeing to let U.S. regulators monitor its operations.

The fine comes on top of $892 million ZTE has already paid for breaking U.S. sanctions by selling equipment to North Korea and Iran.

Lawmakers from both parties have criticized the deal. Sen. Marco Rubio, R-Fla., tweeted that ZTE "is a much greater national security threat than steel from Argentina or Europe," a reference to tariffs imposed by the Trump administration.

"President Trump was flat-out wrong when he decided to go easy on ZTE and allow it to start selling its technology in the United States," said Senate Democratic Leader Chuck Schumer.

"ZTE has violated U.S. sanctions, lied about it, but even more importantly, its technology has been deemed a national security threat by the FCC, the FBI and the Pentagon," Schumer said.

Sen. David Perdue, R-Ga, a Trump ally, asked for unanimous consent to strip the ZTE provision from the annual defense bill last week, but Democrats objected and the provision was left intact.

A vote on the defense bill is expected late Monday. The $717 billion measure would give troops a 2.6 percent pay hike — the largest in nine years — and address shortfalls in military readiness such as pilot training, maintenance of equipment and procurement of new weapons systems.

If approved, the bill would go to the House, which approved the measure last month without the ZTE provision.

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