House and Senate lawmakers have removed a provision in the final version of the fiscal year 2019 defense policy bill banning and reimposing sanctions against Chinese telecommunications firm ZTE, despite concerns over the company’s alleged ties to intelligence operations.
The National Defense Authorization Act (NDAA) conference report, released July 23, retains a provision prohibiting the federal government from using ZTE products but does not include language from the Senate’s version of the bill reinstating penalties lifted by a White House deal with the company, which was announced earlier in 2018.
“The deal that let ZTE off the hook was cut by the president. The trap that we ran into is part of that agreement was that ZTE had to pay a billion dollars in order to be allowed to back into doing business in the U.S,” Rep. Adam Smith (D-Wash.), ranking member on the Senate Armed Services Committee, told the House Rules Committee on July 24. “Everyone on the conference committee wanted to maintain the ZTE provisions. But in order to do that, according to the parliamentarian, we had to come up with a billion dollars, because if we nixed the deal ZTE would not give us the billion dollars.”
Smith said lawmakers did not see an area in the NDAA that could lose funding to cover the billion-dollar ZTE fine.
A bipartisan ground of senators included an amendment in the Senate’s version of the NDAA that would’ve banned American companies from buying ZTE products citing ZTE’s connections to the Chinese government’s intelligence apparatus.
“No nation steals from or spies on us more than China & they use [telecom] companies like ZTE to do it. That’s why I fought so hard to put ZTE out of business in the U.S. & why its shocking some decided to cave & let them survive. We got played by China again. This can’t continue,” Sen. Marco Rubio (R-Fla.), a sponsor of the bipartisan Senate amendment, said in a July 23 tweet.
Sen. Jim Inhofe (R-Okla.) told reporters that the conference leadership had to factor in President Trump’s deal with ZTE when negotiating the NDAA provision.
“I’m always a little hesitant to bust in and try to override something that he’s doing. And this falls into that category,” Inhofe said. “It was a negotiated thing. It still has the language prohibiting the federal government from contracting with people who are buying [ZTE products].”
The House passed the final version of the FY ’19 NDAA on July 26 by a vote of 359-54.