Senate Votes to Reinstate Penalties on ZTE, Setting Up Clash With White House

WASHINGTON — The Senate voted Monday to reinstate tough penalties on ZTE, a Chinese telecom company accused of violating U.S. sanctions, in a sharp rebuke of the Trump administration’s handling of the matter that almost ensures a rare showdown between Republican lawmakers and the White House.

The measure, pushed by senators from both parties, was tucked into a voluminous annual defense policy bill that passed the Senate on Monday evening by a vote of 85-10. The provision would undo an agreement the Commerce Department recently reached that would allow ZTE to remain in business in exchange for paying a $1 billion fine, replacing its senior leadership and installing U.S. compliance officers. The ZTE deal came over vociferous objections from lawmakers, who accused President Donald Trump of putting national security at risk by allowing a company that violated U.S. sanctions to remain business.

Trump instructed the Commerce Department last month to look into easing penalties that barred ZTE from buying U.S. products for seven years after President Xi Jinping of China personally asked him to save the company.

The Senate vote was an unusual act of independence for a Republican-controlled Congress that has shown little interest in publicly crossing the Trump administration, even on issues where it disagrees with the president.

But the vote is merely one step in what is expected to be a contentious process. The White House has objected to the Senate provision and vowed to try to strike it before the bill becomes law.

Republican lawmakers were scheduled to meet with Trump at the White House on Wednesday to discuss a path forward, according to Sen. John Cornyn of Texas, the No. 2 Senate Republican.

“Obviously there’s conflict between what the amendment provides, which is an outright ban, and that deal, so something will have to work out in the conference committee,” Cornyn said. He said he had “no earthly idea” how the two sides might reconcile.

The House has passed its own version of the defense bill, which does not include the ZTE penalty language, and the two chambers must now spend weeks hammering out that and other differences in the two bills before final passage — a window the administration believes it can exploit to undo the Senate’s action.

Reimposing penalties on ZTE could further strain relations between the United States and China, which are locked in a standoff over trade and have been trying in vain to reach an agreement to forestall a trade war between the world’s two largest economies.

The provision was supported by large numbers of both Republicans and Democrats in the Senate, who view ZTE as a national security threat. It also prohibits the federal government from purchasing or leasing equipment from ZTE or another Chinese company they believe to be a national security threat, Huawei, or from subsidizing the companies in any way.

The defense bill, the National Defense Authorization Act, would authorize just over $700 billion in military spending for the coming fiscal year and is intended to provide a framework for the Trump administration’s continued buildup of the armed forces. The legislation outlines a range of stipulations, including strategic priorities for the military, pay increases for service members and investments in emerging technologies that policymakers believe could reshape the way the United States and other nations conduct warfare.

A far-reaching measure that is considered must-pass legislation, the annual defense bill is frequently a magnet for lawmakers trying to attach policy provisions only tangentially related to national security. In the Senate, this year’s bill provided a venue for Republican senators increasingly distraught with Trump’s protectionist trade policies to try to force his hand. Mostly, they failed.

Senate leaders blocked an amendment, advanced by Sen. Bob Corker, R-Tenn., that would have given Congress the power to veto certain national security tariffs imposed by the administration before it was ever brought up for a vote. The decision enraged Corker, who called his party’s deference to Trump “cultish,” but only after the machinations over the amendment all but eclipsed the defense policies in the bill.

Another Republican-proposed amendment that would have given Congress greater oversight of the agency that reviews proposed acquisitions of U.S. companies by foreign firms — known as the Committee on Foreign Investment in the United States, or CFIUS — failed in a floor vote Thursday. That amendment was opposed by the Trump administration, which said it could hamper the role of CFIUS and put national security at risk.

But lawmakers did include a separate, bipartisan amendment that would give CFIUS more power by expanding its reviews from focusing strictly on mergers and acquisitions to include joint ventures. Lawmakers have said the provision is aimed at Chinese companies that had been bypassing the CFIUS review by forming joint ventures with U.S. companies or licensing their technology.

The underlying defense legislation aims to build on the Pentagon’s national defense strategy unveiled in January. That document called for the United States to begin shifting its focus from the decadeslong fight against terrorism to countering ascendant Russian and Chinese military might.

The bill, for example, labels China and Russia “revisionist powers and strategic competitors that seek to shape the world toward their authoritarian model through destabilizing activities that threaten the security of the United States and its allies.” The bill bears the fingerprints of Sen. John McCain, R-Ariz., chairman of the Armed Services Committee, even though McCain has been absent from Washington for months as he battles brain cancer. Sen. James M. Inhofe, R-Okla., pushed the bill through the chamber and fought back several last-minute attempts to amend the legislation.

The bill would make major investments in research and development to compete with Russian and Chinese weapons developments. Specifically, it would send more than $600 million above the administration’s budget request for programs in hypersonics, quantum computing, directed energy and other technologies.

It also sets policy for a dizzying array of programs and personnel matters, large and small, including a 2.6 percent pay raise for service members. It also outlines purchasing decisions on fighter jets, submarines, combat ships and other craft, and for the first time in decades, it outlines changes in the officer promotion program.

And at a time of deepening humanitarian crisis in Yemen, it also takes steps to potentially curtail the U.S. involvement in aiding an Arab military coalition fighting in the long-running civil war there.

A provision written by Sens. Todd Young, R-Ind., and Jeanne Shaheen, D-N.H., threatens to cut off funds for U.S. aerial refueling of Saudi and Emirati jets in the conflict if the secretary of state cannot certify that Saudi Arabia is taking certain steps to limit civilian casualties and bring the war to an end. Those steps include increasing access for Yemenis to food, fuel and medicine through the port of Hodeida, which the Arab military coalition invaded last week.

The House passed its version of the bill, known as the NDAA, late last month, without any of the trade provisions considered by the Senate. Rep. Mac Thornberry, R-Texas, chairman of the House Armed Services Committee, told reporters last week that he hopes to quickly reconcile differences in the two bills and finish the process before the House leaves for its August recess. He indicated that he would fight letting any provision, including the Senate’s ZTE language, derail that process.