Congress is backing down from its threat to reinstate harsh penalties on China’s ZTE.
It’s a win for President Donald Trump, who recently eased restrictions on the company.
Members of the House and Senate on Monday announced that they have agreed to the final version of the annual defense policy bill known as the National Defense Authorization Act. It did not include a provision to reimpose a US export ban on ZTE, which had been in the version passed by the Senate.
The legislation still needs to be voted on in both chambers, though it is widely expected to pass.
The Trump administration lifted the export ban on ZTE earlier this month after striking a deal with the company, which makes smartphones and telecommunications equipment.
Before the final version of the defense bill was crafted, members of Congress from both parties had threatened to undo Trump’s agreement. They claimed that ZTE posed a security threat.
Lawmakers ultimately softened the bill Monday, though some on Capitol Hill still weren’t happy. Senator Marco Rubio, a Republican, said Monday he was “shocked” by the weakened version.
“No nation steals American intellectual property or spies on America more than China, and Chinese telecommunication companies are among the most powerful tools they use to do this,” Rubio said in a statement. “That is why I fought so hard last month to put ZTE out of business. And that is why I am so shocked that some of my colleagues decided to let ZTE continue to do business.”
The legislation doesn’t let ZTE off the hook entirely.
It prohibits government agencies and companies that do business with the US government from buying technology from both ZTE and Huawei, China’s biggest telecom company.
Companies that do business with the government will have five years to get rid of ZTE and Huawei equipment, according to a Congressional aide familiar with the final bill.
It’s been a tumultuous few months for ZTE. In April, the United States blocked ZTE from buying US parts. The Trump administration said that ZTE had lied to US officials about punishing employees who violated US sanctions against North Korea and Iran.
And in May, the Pentagon told US military bases to stop selling phones made by ZTE and Huawei. The agency claimed they posed security risks to the Defense Department.
Later that month, though, Trump said he would personally work with Chinese President Xi Jinping to get ZTE “back into business, fast.” He said the US punishment was costing too many Chinese jobs.
When the US Commerce Department eventually lifted its export ban on ZTE, the company paid a $1 billion fine and put $400 million in an escrow account. ZTE also had to bring in an American monitoring team and overhaul its top management.
–CNN’s Ryan Browne contributed to this report.