US Lifts ZTE Ban Against Senators’ Warnings

Kyle Perisic | Contributor

Against the constant warnings of a bipartisan group of senators, the U.S. has finalized its deal with Chinese telecommunications giant ZTE, lifting its April ban.

The Commerce Department announced the decision to lift the ban on the Chinese-linked company after it completed its side of the terms of the deal by placing $400 million in a U.S.-approved escrow account. ZTE paid a $1 billion fine and replaced its board of executives as well.

“While we lifted the ban on ZTE, the department will remain vigilant as we closely monitor ZTE’s actions to ensure compliance with all U.S. laws and regulations,” Department of Commerce Secretary Wilbur Ross wrote in a statement, Reuters reported.

A bipartisan group of senators led by Florida Republican Sen. Marco Rubio and Senate Minority Leader Chuck Schumer, are vocally opposing the White House’s deal. Other senators opposing the agreement include Democrat Chris Van Hollen of Maryland, Republican Tom Cotton of Arkansas, Democrat Mark Warner of Virginia, and Republican Roy Blunt of Missouri.

The bipartisan group of senators wrote an open letter to the chairmen and ranking members of the House and Senate Armed Services committees asking them to make amendments to the National Defense Authorization Act (NDAA) that includes provisions against ZTE.

“We strongly oppose the June 2018 deal with ZTE negotiated by the Commerce Department’s Bureau of Industry and Security (BIS) to lift the seven-year ban against the export of U.S. parts and components to ZTE,” the senators wrote.

Schumer was able to make an amendment to the Senate’s version of the NDAA that includes that keeps in place the provisions against ZTE. (RELATED: As China’s ZTE Crosses Last Hurdle To Lift US Ban, Shares Skyrocket)

The Defense Department declared ZTE a nation security risk after it had discovered the technology could possibly be tracking users, including those on U.S. military bases. ZTE had also violated U.S. sanctions against North Korea and Iran by selling U.S. parts to the countries.

The Defense Department halted the sale of ZTE and other Chinese devices on U.S. military bases around the world, citing security concerns, The Daily Caller News Foundation reported May 3.

“ZTE devices may pose an unacceptable risk to Department’s personnel, information and mission,” said Army Maj. Dave Eastburn, a Pentagon spokesman, in a statement in May. “In light of this information, it was not prudent for the Department’s exchanges to continue selling them to [Defense Department] personnel.”

Despite this, President Donald Trump’s administration has been working to restore the sale of ZTE products, since it is the fourth-largest seller of phones in the U.S. The U.S. ban would’ve effectively put the company out of business.

As a vocal critic of China and the country’s trade practices during the 2016 presidential election, the ZTE deal is a crucial part of Trump’s trade war with China.

“The ZTE settlement represents the toughest penalty and strictest compliance regime the Department has ever imposed in such a case,” the Commerce Department said in a statement on Wednesday, after ZTE paid the $1 billion fine, adding that it expects the punishment will “deter future bad actors.”

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