ZTE Resolution Rejected by House Committee
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Wednesday, June 6, 2018

ZTE Resolution Rejected by House Committee

Legislation that would have required the Department of Homeland Security to give Congress any documentation it has regarding the cybersecurity threat posed by the use of ZTE Corp. technology products was voted down today by the House Homeland Security Committee.

Introduced by Rep. Bennie Thompson (D., Miss.), the committee’s ranking member, the ZTE “resolution of inquiry” was a reaction to President Trump’s request that the Commerce Department review an export ban that the department imposed on ZTE last month for corporate misbehavior (TR Daily, May 16).

The resolution would have forced the administration to provide information about its assessment of the threat posed by the use of ZTE products and President Trump’s impetus for trying to rescue the company, which said the U.S. export ban had caused it to cease major operations.

“Why is the president interested in helping ZTE, a company whose products our government and our allies believe could pose serious national security risks?” Rep. Thompson asked at a committee meeting today where his ZTE resolution and several other bills were considered.

“We have no idea who the president consulted when he decided to save a company whose products the Department of Defense and the intelligence community have openly suggested pose a national security threat,” Rep. Thompson said. “The president’s cavalier attitude toward cybersecurity is disturbing, and this committee must do its part to ensure his decisions do not jeopardize national security.”

The committee’s chairman, Rep. Michael McCaul (R., Texas), said he viewed Rep. Thompson’s resolution as unnecessary given other congressional actions to restrict U.S. sales of ZTE products, including a National Defense Authorization Act recently passed by the House that would ban federal government agencies from doing business with any entity that uses products from ZTE.

“I agree with the ranking member on the intentions behind the resolution,” Rep. McCaul said. “I think where we are in disagreement is how to go about doing this.” The resolution failed by a vote of 16-11.

Rep. Thompson was not alone in expressing concerns about ZTE today as new reports emerged that the administration had agreed to relax sanctions on ZTE in exchange for trade concessions from the Chinese government, which has added ZTE to the list of issues on the table for U.S.-China trade negotiations.

Larry Kudlow, director of the White House National Economic Council, today told reporters that the administration had not reached a deal with China to relax sanctions against ZTE. “No decision has been reached by both sides, as of now,” he said.

But reports about a pending deal prompted Democrats in the House and Senate to issue statements of concern and calls for legislation. “Some reports suggest that the Trump administration is forgiving ZTE to set up an exchange for a short-term, limited purchase of U.S. goods from China. If that’s the case, what a terrible deal for America,” said Sen. Chuck Schumer (D., N.Y.), the Senate minority leader.

“Our number one priority should be reducing the threat of intellectual property theft. Intellectual property theft not only threatens our short-term economic outlook, it threatens our long-term leadership in high-tech industries, middle-class jobs for the future, and the security of our country,” Sen. Schumer said.

“By backing off and letting ZTE off the hook, China wins,” he said. “If the reports are true, Congress should move in a bipartisan fashion to block this deal right away.”

Rep. Anna G. Eshoo (D., Calif.), meanwhile, wrote to Commerce Secretary Wilbur Ross to urge him not to reverse the export ban imposed on ZTE. “Your number-one responsibility and mine is contained in our oath of office: to ‘protect and defend’ our citizens from enemies external and internal,” Rep. Eshoo said. “We cannot make deals with foreign entities with a history of compromising our telecommunications sector when it presents a clear and direct challenge to our national security.” —Tom Leithauser, tom.leithauser@wolterskluwer.com

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