‘Give ZTE the death sentence’ say senators as White House vows to resist repeal of Donald Trump’s deal

On Monday the Senate inserted wording into a defence bill that would repeal Trump’s deal; now the White House hopes to alter or remove that amendment

PUBLISHED : Wednesday, 13 June, 2018, 10:22pm
UPDATED : Thursday, 14 June, 2018, 7:49am

US Senators demanded a “death sentence” for ZTE Corp. late on Wednesday as they encouraged the passage of an amendment that will repeal US President Donald Trump’s deal with the Chinese company – hours after the White House vowed to fight their plan.

Democratic Senator Chris Van Hollen of Maryland and Republican Senator Tom Cotton of Arkansas urged the senate to approve a change to a defence bill that will reinstate the original harsh penalties the US Commerce Department had imposed on China’s second biggest telecom company.

“These companies have proven themselves to be untrustworthy,” said Cotton. “At this point, the only fitting punishment is to give them the death sentence. That is to put them out of business in the United States.”

Van Hollen, supporting Cotton’s view, added that ZTE is “a multiple and flagrant violator of US sanction laws and we can’t let them off the hook with the slap on the wrist”.

Both Van Hollen and Cotton were members of the the bipartisan group of senators that, late on Monday, agreed to include the amendment in the must-pass National Defence Authorisation Act.

The language would reverse Trump’s deal to help the sanctioned Chinese telecoms company get back on its feet. The senators objected to the deal on national security grounds.

ZTE shares slump 42 per cent as it moves to fire senior executives

Earlier on Wednesday, Marc Short, the White House legislative affairs director, said that the Trump administration planned to oppose the legislative measure.

The tit-for-tat action would leave ZTE’s destiny in limbo, as well as add to the layers of uncertainty ahead of Trump’s decision on Friday about whether to impose the announced US$50 billion in tariffs on Chinese goods.

The feud between Trump and the senators has implications for the broader issue of trade talks between the US and China, its largest trading partner and the second largest economy in the world. Trump had said the ZTE deal was necessary as a goodwill gesture leading up to the talks.

The only fitting punishment is to give them the death sentence. That is to put them out of business in the United States
Senator Tom Cotton

Caught in the midst of political backlash, ZTE shares fell 42 per cent in Hong Kong to HK$14.96 (US$1.91) and by the daily limit of 10 per cent to 28.18 yuan in Shenzhen Wednesday, the first day of trading.

Bad news for ZTE: Senate moves to crush Trump deal amid trade war backlash

ZTE resumed trading on Wednesday after a nearly two-month suspension following a deal last week to pay up to US$1.4 billion in penalties to the US government and said it would drastically overhaul its management and open its site to a US-appointed compliance team. It also issued a public apology.

Monday’s amendment, which was introduced into the 2019 National Defence Authorisation Act, is expected to go to the Senate for a vote this week.

The bill would then need to be reconciled in the House, which passed an initial version in May, before it goes to Trump to be signed into law.

ZTE to replace board, fire senior management under US deal

Congress’s “attempts to block the ZTE deal are likely to fail,” analysts led by Kim Wallace at Eurasia Group wrote Tuesday in a report. “The House has no such language in its version” and “will be reluctant to challenge the administration so close to the midterms”.

A separate amendment to the defence bill aiming to rein in Trump’s tariffs on steel and aluminium was shot down on Tuesday. Republican Senator James Inhofe, the defence bill’s manager, objected to Senator Bob Corker’s bid to attach his amendment to the bill, dooming the effort.

ZTE was banned in April from purchasing any US components for seven years after it violated US sanctions on selling equipment to Iran and North Korea.

The ban, which stopped ZTE from buying microchips from US company Qualcomm, among other components, led it to shut down its major operations within weeks.

After Trump made a sudden reversal in May to save ZTE, he met with resistance from a bipartisan group of senators who said that ZTE was a national security threat and that removal of the sanctions was not negotiable.

“I don’t think the president cares about ZTE,” Senator Bob Corker, a Tennessee Republican, told reporters.

“Someone told me that he gave [Republican 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.”