Trump Still Wants to Save ZTE, the Chinese Telecom Firm That’s a Threat to U.S. Security

President Trump has been facing a self-inflicted humanitarian crisis this week, as he deals with the massive public backlash to his administration’s decision to separate migrant children from their parents.

But despite that ongoing ordeal — one which appears to be far from over — The Donald still managed to find some time this week to fight to save his favorite shady foreign telecommunications company.

On Monday, the Senate passed its annual defense authorization bill by a bipartisan vote of 85-10. Included in the legislation was a provision that would ban Chinese telecom company ZTE from doing business in the United States. If enacted, that provision would reverse a controversial deal Team Trump made to save the company.

And Trump isn’t happy about the Senate's big move. On Wednesday, he met with key Republican lawmakers and urged them “not to scuttle his administration’s efforts” on ZTE. While no conclusion came out of the meeting, several Members of Congress in attendance told the New York Times that they hope a compromise between the White House and Capitol Hill will be reached.

In case you are just tuning in to this particular plotline of The Trump Show, here’s how we got here.

Back in April, the Commerce Department barred ZTE from importing any American components for seven years, which would put ZTE out of business.

Commerce made that move after concluding that ZTE failed to discipline employees who previously violated U.S. sanctions on Iran and North Korea. Meanwhile, the Defense Department banned the sale of ZTE products on military bases, fearing Chinese espionage.

The decision made sense. Then Trump stepped in.

The one-time steak salesman bizarrely tweeted on May 13 that he and Chinese President Xi Jinping “are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost.”

So the Commerce Department went back to work, eventually hammering out a deal. ZTE will have to pay a $1 billion fine, and a U.S.-selected compliance team will be embedded in the company to monitor ongoing activities. But ultimately, ZTE can stay in business.

As we’ve previously noted, Trump’s decision to rescue ZTE is a mistake. ZTE is a big threat to our national security, and its repeated sanctions violations do not inspire confidence.

That was the conclusion on Capitol Hill, too, where everybody from Republican Sen. Marco Rubio (Fla.) to House Democratic Leader Nancy Pelosi (Calif.) criticized the ZTE rescue. And on Monday, the Senate acted to stop it.

Now Trump is fighting to keep his rescue of ZTE alive, arguing that it is a key part of his larger “geopolitical negotiating strategy.” Based on some of the feedback lawmakers had following their White House meeting, it appears Trump might have made some headway, at least on the Republican side.

Still, not everybody is convinced:

There's still a long way to go before any of this gets settled.

The defense authorization bill passed by the Senate now must be reconciled with the House’s version of the bill, which didn’t include the ZTE provision. That gives Trump the chance to convince lawmakers to get rid of the ZTE language, or at least water it down. Ultimately, Trump will need to sign the final bill -- or he can veto it and send it back to Congress, which is probably unlikely, but still possible. This is Trump, after all.

Given the serious security threat that ZTE poses — along with the fact that Trump has made no real progress negotiating actual structural reforms that will rebalance trade with China — Congress would be wise to keep the original language in the final bill.


Reposted from AAM

Posted In: Allied Approaches, From Alliance for American Manufacturing