ZTE Deal On Brink Of Collapse After Senate Vows To Derail Trump Agreement

Update: In what looks like a last-minute attempt to save face, the White House is insisting that it does, in fact, want to block an amendment that would derail its deal to save ZTE.

  • Senior White House Official: White House to Try to Block ZTE Language in Senate Defense Bill
  • White House Will Fight to Change ZTE Language Later In Legislative Process — Senior White House Official
  • House Has Already Passed a Defense Bill That Needs To Be Reconciled With Senate Bill

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Now that President Donald Trump has notched what he views as another foreign policy victory in his historic meeting with North Korean leader Kim Jong Un, Republican lawmakers have noticed something unusual: Trump isn’t trying to dissuade lawmakers from supporting a measure that would thwart a White House deal with Chinese telecoms giant ZTE – a deal that many viewed as a sop to secure Chinese President Xi Jinping’s blessing for this week’s summit with North Korea, according to the Wall Street Journal.

Trump hasn’t resorted to using any of his favorite tactics for whipping up votes (for example, using Twitter to bash lawmakers who oppose him), and, in fact, has done little to stop the measure – which the Senate yesterday attached as an amendment to a “must-pass” defense authorization bill – from moving forward.


Trump’s lack of enthusiasm for saving ZTE has prompted some lawmakers to speculate that he “doesn’t care” about saving the company, which would effectively be forced to shut down if it’s cut off from buying US exports.

“I don’t think the president cares about ZTE,” Sen. Bob Corker (R., Tenn.) told reporters. “Someone told me that he gave [GOP lawmakers] a wink and a nod and told them he didn’t care. I don’t know if that’s true or not, but I think he did what he did for the Chinese leader but he doesn’t really care what Congress does.”

Representatives for the White House, the Commerce Department and ZTE didn’t immediately comment.

ZTE shares plunged 41.5% last night – the company’s largest one-day drop in its history – when they opened for trading in Hong Kong after being suspended for two months. The drop wiped out some $8 billion in market value. Shraes of NXP fell 1.4% in premarket trading in the US Wednesday extending a weekly decline on news that the amendment to kill the ZTE deal might go through.


In the weeks leading up to Trump’s meeting with Kim, the president spent hours in private meetings trying to convince Republicans to support the White House’s decision to give ZTE another chance. But Trump’s pleas did little to disabuse lawmakers of their opposition to the deal. In fact, the Senate is expected to pass the defense bill – with the ZTE-killing amendment attached – later this week. And it’s looking increasingly likely that the House will adopt a similar measure during the conference committee for the bill.

Sen. Tom Cotton, one of the amendment’s main backers, said he believes Trump won’t veto the defense bill if it passes with the ZTE measure attached – though he wouldn’t say where he got the idea.

On Monday, Mr. Cotton predicted that Mr. Trump wouldn’t use his veto power to reject the defense bill over the ZTE language. Mr. Cotton, who speaks regularly to Mr. Trump, declined to say whether the president had given him a personal guarantee. “I don’t reveal my private conversations with the president,” Mr. Cotton said.

In a Tuesday interview, Mr. Van Hollen said: “If the president’s backing down, that’s a good thing for the country.” He added: “We would welcome a statement from the president saying he made a mistake and that he now supports the bipartisan amendment on this.”

The Commerce Department announced in April that it would prohibit US companies from selling parts to ZTE, a move that effectively doomed the company. Roughly a month later, Trump tweeted that he and Chinese President Xi Jinping were searching for an alternative way to deal with the ZTE problem as Trump declared “too many jobs in China lost!”

While that tweet incensed many lawmakers and officials involved in the defense and intelligence sectors (many have long suspected ZTE and other Chinese telecoms firms of aiding Chinese intelligence gathering efforts), it suggested that ZTE would be a key component of the grand “deal” that Trump is seeking to forge with China (though Wilbur Ross has insisted that the administration’s decision to spare ZTE wasn’t part of a broader quid pro quo).

Instead of banning ZTE from buying US goods, the company will pay a $1 billion fine, and place an additional $400 million in escrow to be paid out if the company again violates its settlement with the US government. In addition, the company has promised to replace its senior leadership and its entire board, while also funding a compliance operation that will continue for the next decade.
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