The White House objected Wednesday to a provision in the Senate’s annual defense funding bill overturning a deal by the Commerce Department to lift a U.S. sales ban on Chinese telecommunications firm ZTE Corp.
The agreement, announced earlier this month, requires ZTE to pay a $1.4 billion fine, overhaul its management team and allow the U.S. government to hire an in-house compliance group. It reversed a seven-year sales ban imposed by the Commerce Department after ZTE violated U.S. sanctions against Iran.
The provision, poised to pass the Senate this week as part of the fiscal 2019 National Defense Authorization Act, would restore the restrictions and bar the U.S. government from purchasing goods from ZTE and fellow Chinese telecommunications firm Huawei Technologies Co. It was sponsored by Sens. Tom Cotton, R-Ark., and Chris Van Hollen, D-Md. The Pentagon previously blocked the sale of ZTE and Huawei products on U.S. military bases.
White House Deputy Press Secretary Hogan Gidley said the administration would work with Congress to scrap the provision. The House-passed defense funding bill did not include the Cotton-Van Hollen language.
“The massive penalties imposed on ZTE are part of an historic enforcement action taken by the Department of Commerce,” 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.”
A spokesman for the House Armed Services Committee did not respond when asked if panel chairman Mac Thornberry, R-Texas, has discussed the measure with the administration. White House officials didn’t respond to questions about whether President Trump would veto the funding bill should the provision remain, but such a move is considered unlikely.
ZTE shut down its U.S. operations after the ban was initially imposed.
