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U.S. Senate, White House gear up for battle over China's ZTE

Reuters  |  WASHINGTON 

By Patricia Zengerle

WASHINGTON (Reuters) - Legislation to block the Trump administration's agreement allowing China's Corp <000063.SZ> to resume with American suppliers could be killed in the U.S. in the coming weeks, lawmakers and aides said on Wednesday.

The U.S. is due to vote within days on the measure as part of the National Defense Authorization Act, or NDAA, a defence policy bill passes every year. The strongly opposes the measure.

If it passes, the and must negotiate a final version of the NDAA. The provision, which is not included in the House version of the defence bill, could be stripped out during those negotiations.

Mac Thornberry, the of the House Armed Services Committee, said he would oppose anything in the NDAA not germane to the Defense Department if it threatened to delay swift passage of the $716 billion bill, which governs everything from military pay raises to aircraft and ship purchases, military aid and other national security policies.

He said that process could be completed by the end of July.

The House NDAA includes a separate provision barring agencies from using "risky" technology from ZTE or Technologies [HWT.UL], describing the Chinese companies as "linked to the Chinese Communist Party's intelligence apparatus."

Should it become law, the ZTE measure would restore penalties on the company for violating export controls and bar agencies from purchasing or leasing equipment or services from the Chinese company.

The banned the company earlier this year, but the reached an agreement to lift the ban, while it is negotiating broader trade agreements with and looking to for support during negotiations to halt North Korea's nuclear weapons programme.

Chinese requested the change.

STIFF PENALTY ON ZTE

In a settlement with the U.S. Commerce Department, ZTE agreed to pay a $1 billion fine, overhaul its leadership and meet other conditions, including putting $400 million in escrow in a U.S.-approved

The pushed back against the legislation, defending the agreement as "part of an historic enforcement action" giving the U.S. government some leverage over ZTE's activity without "undue harm" to U.S. suppliers and workers.

said the administration will work with to ensure that the final version of the NDAA "respects the separation of powers."

And some of Trump's fellow Republicans, who control Congress, back the White House.

Republican Senator tried and failed to win the Senate's support for killing the ZTE measure on Wednesday, arguing that limiting the Commerce Department's authority would undercut Trump's ability to negotiate trade deals with

But the ZTE measure's main sponsors, Democratic Senator and Republican Senator Tom Cotton, both said they believed it had enough support from and Democrats to pass the despite White House opposition.

"These companies have proven themselves to be untrustworthy, and at this point I think the only fitting punishment would be to give them the death penalty - that is, to put them out of in the United States," Cotton said in a Senate speech, referring to both ZTE and

Cotton said he and Van Hollen would keep working in the common months to ensure the ZTE measure stays in the defence bill.

ZTE shares plunged in Hong Kong and markets on Wednesday in its first day of trading after an almost two-month halt. Investors wiped about $3 billion off its market value, or about 40 percent, in initial trading.

(Reporting by Patricia Zengerle, additional reporting by Jeff Mason; editing by Damon Darlin, and Cynthia Osterman)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Thu, June 14 2018. 04:59 IST
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