After the Trump administration reached a trade agreement with ZTE barely a week ago, the US-ZTE drama seemed done and over with. But now, thanks to a new provision from Congress, it’s poised to become even messier.
On Monday evening, the Senate put the kibosh on Trump’s deal to throw the Chinese telecommunications company ZTE a lifeline. A bipartisan provision added to the National Defense Authorization Act (NDAA) says that all penalties imposed on ZTE must stay in place, despite any executive action. The NDAA passed 85-10.
ZTE stopped operations in May after the U.S. issued a seven year export ban on American parts for the company, which the company needed to make its products. The US issued the ban because ZTE failed to comply with the terms of an initial punishment for violating US trade sanctions by selling telecommunications equipment to Iran and North Korea.
But most recently, President Trump directed the Commerce Department to strike a new deal with ZTE, that he said would save Chinese jobs.
President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!
— Donald J. Trump (@realDonaldTrump) May 13, 2018
Secretary of Commerce Wilbur Ross announced that deal earlier in June, which came with steep penalties, but ultimately saved the company. Trump’s attitude toward ZTE and the deal prompted confusion and anger from both democrats and republicans.
Some of the loudest criticism came from Sen. Marco Rubio (R-Fl.) and Sen. Tom Cotton (R-Ark.). Those two senators are responsible for spearheading the NDAA provision, along with Democratic senators Charles Schumer (D-N.Y.), Chris Van Hollen (D-Md.)
The bill also includes a section that prevents the Secretary of Defense from purchasing any equipment or doing any business with ZTE, and Huawei. The bill states that it’s in response to ZTE’s sanctions violations, as well as CIA, FBI, and NSA advisement that using the phones might be a security risk — cuz, uh, China could be using them to spy on the US.
The NDAA already passed the House of Representatives, in a previous version that did not contain the ZTE provision. Now, according to Ars Technica, a conference committee will have to meet to reconcile the two versions before it can go to President Trump for his signature.
And boy, that’s when things will get interesting. Trump’s conciliatory stance toward ZTE shocked many considering that the company’s initial offense came from violating trade sanctions with North Korea and Iran. Trump has talked a big game about dealings with these countries and the need for shows of American strength. Indeed, shortly before he tweeted support for ZTE, Trump scuttled the Iran nuclear deal, and instead imposed harsher sanctions.
There was also some head scratching at the fact that three days after Trump threw his weight behind the ZTE issue, a new development deal closed between a Chinese company and the Trump corporation, which Donald Trump, Jr. and Eric Trump still run.
But Trump has also blustered about the need for a strong military. So if he vetoes the defense spending bill because of a ZTE provision, that move could be seen as prioritizing a personal favor to the Chinese government above national defense — and above any actual conviction about using sanctions to impose US will around the world.
Furthermore, Trump has been ratcheting up his threats of imposing harsh tariffs on China for months. Tuesday, he escalated that, leading the two countries further to the cliff of a trade war. Why ZTE holds a special exemption for Trump’s ire is still unclear.
ZTE is becoming a flashpoint where issues of trade, defense, and Trump’s rocky relationship with Congress all converge. And knowing how our tantrum-prone president responds to challenges of his power, the saga isn’t likely to end any time soon.