Senators and representatives will have meeting to reconcile the two versions of the annual defense bill
The U.S. Senate has approved an amendment to the annual defense spending bill which threatens a recent agreement between the Department of Commerce and Chinese vendor ZTE to lift a seven-year export ban.
Senators voted to include an amendment to the defense bill, which would reinstate the ban on ZTE buying components from U.S. tech companies such as Qualcomm, Dolby, Intel, Google and Acacia Communications. The bill passed with 85 votes in favor and 10 against.
The House of Representatives already passed a version of the proposed legislation including a provision that would prevent the government from purchasing ZTE products – but it wouldn’t reinstate the sanctions against ZTE. Now the competing versions of the bill must be reconciled, with President Trump expected to lobby heavily in favor of the House version, which the White House has said it prefers. Trump could also veto the legislation if the version sent to his desk includes the export ban.
ZTE stock, which resumed trading last week, plunged on the news.
In a joint statement, Republican Senators Marco Rubio and Tom Cotton, as well as Democratic Senators Chuck Schumer and Chris Van Hollen, said: “We’re heartened that both parties made it clear that protecting American jobs and national security must come first when making deals with countries like China, which has a history of having little regard for either.
“It is vital that our colleagues in the House keep this bipartisan provision in the bill as it heads towards a conference,” the statement added.
That seven-year ban had been imposed by the Department of Commerce’s Bureau of Industry and Security in March, after the vendor allegedly did not live up to the terms of an agreement that had been worked out after it illegally shipped telecom equipment to Iran and North Korea. In early May, ZTE said it had ceased its major operating activities due to the export ban.
Earlier this month, the U.S government reached an agreement with ZTE which would allow the firm to resume business. Under the current terms of the agreement, the Chinese company must replace the boards of directors of ZTE Corp. and ZTE Kangxun.
Additionally, all members of the company’s leadership at or above the senior vice president level also must be terminated, as well as any executive or officer tied to the export violations which led to the U.S sanctions.
In a recent filing, the Chinese vendor said it will pay a $1 billion to the U.S. government as part of a settlement agreement, as well as an additional $400 million in escrow.
ZTE also said it would resume operating activities as soon as practicable after BIS terminates the Denial Order.
Since trading resumed last week, ZTE has lost 38% of its market value or more than $7 billion, according to Asian press reports.