Trump tells Republicans not to undercut him on ZTE

Trump administration officials have defended their approach to ZTE, insisting that they are being tough on the company while protecting US businesses that deal with ZTE.
Trump administration officials have defended their approach to ZTE, insisting that they are being tough on the company while protecting US businesses that deal with ZTE.PHOTO: AFP

WASHINGTON (NYTIMES) - President Donald Trump urged Republican lawmakers on Wednesday (June 20) not to scuttle his administration's efforts to help the Chinese telecom firm ZTE, warning them that his reprieve for the company was part of a broader geopolitical negotiating strategy.

Trump and Republican lawmakers met at the White House to discuss the fate of the company, which had been banned by the Commerce Department from buying US products this year as punishment for violating US sanctions. The administration has since lifted that ban at Trump's request and over the objections of lawmakers, who voted Monday to reinstate the penalties on ZTE.

Trump ordered his Commerce Department to water down the penalties, which would have put ZTE out of business, after President Xi Jinping of China personally lobbied him to reconsider. The deal helped defuse tensions with Xi, whom the president has relied on to help pave the way for discussions with North Korea's leader, Kim Jong Un. China and the United States are also locked in a contentious dispute over trade, with both countries threatening tariffs on billions of dollars of each other's goods.

Senator John Cornyn, the No. 2 Senate Republican, suggested Wednesday that lawmakers would be willing to compromise with the president to avoid undercutting his leverage in talks with China and North Korea. The ZTE penalty was tucked into a large military policy Bill that passed this week in the Senate and still must be reconciled with the House Bill, which did not include the penalty. That gives lawmakers and the White House a chance to either jettison the penalty or make it more palatable to Beijing.

"I'm pretty optimistic we'll be able to come up with something that preserves the president's leverage," Cornyn said after the meeting. "Because he's telling us" 'Look, when I'm negotiating with Xi, this is more than just trade, this is more than just sanctions. This is about North Korea and other geopolitical issues.'"

He added: "So we wanted to make sure we weren't stepping on his need to have credibility and to be able to use his authority to negotiate well in these other spaces."

Lawmakers suggested that a decision has not yet been reached. For one thing, the lawmakers who will be charged with reconciling the Senate and House versions of the bill in which the ZTE provision was included have not been named. But any final legislation will also likely require at least some Democratic support to get through the Senate, which will have to vote on the reconciled Bill.

Senator James M. Inhofe, who as acting chairman of the Armed Services Committee is expected to help shepherd the Bill through the conference committee, said he made clear to Trump at the meeting that he and other Republicans would be willing to respect his approach.

"He's in the middle of negotiations with China, and he doesn't want anything that is going to be passed that would encumber his ability to get things done," Inhofe said. "What I said to him was, 'We don't want to interfere with your ability to negotiate, so we can make changes in conference and probably take care of the problems that you have with that.'" It was not clear what those changes might be or how such a compromise would come together.

"We came to no conclusion that I could discern," said Senator Ron Johnson. "This type of meeting really isn't one where you'd think you will really come to any conclusion." The Commerce Department initially barred ZTE from buying US products, including semiconductors, for seven years as punishment for violating US sanctions against Iran and North Korea. It then reconsidered the penalty and decided to levy a US$1 billion (S$1.36 billion) fine on the company, replace its senior leadership and install U.S. compliance officers. The Senate measure would undo that agreement.

Trump administration officials have defended their approach to ZTE, insisting that they are being tough on the company while protecting US businesses that deal with ZTE.

Wilbur Ross, the commerce secretary, reiterated that position Wednesday at a Senate Finance Committee hearing about trade.

"From a strictly enforcement point of view, I think if that had been our original solution, everyone would have applauded," Ross said of the ZTE fine.

Shares of ZTE have been fluctuating wildly amid the machinations between the Trump administration and Congress, and that is likely to continue as the debate proceeds this summer.

Democrats remain unconvinced by the administration and have seized on the opportunity to call Trump soft on China. Senator Chuck Schumer, the minority leader, pressed Republicans on Wednesday not to relent under pressure from the president.

"My Republican colleagues must resist efforts by the Trump administration - at the behest of the government of China - to get them to water down or back off of the Senate's strong language on ZTE in the defense Bill," Schumer said. "As my colleagues on both sides of the aisle have already stated, it is vital that our colleagues in the House keep this bipartisan provision in the defence Bill as it heads towards a conference."