June 26, 2018 / 9:47 PM / 4 months ago

U.S. senators want Trump to reconsider lifting ban on China's ZTE

WASHINGTON (Reuters) - Two U.S. senators urged President Donald Trump on Tuesday to reconsider his agreement with ZTE Corp (000063.SZ), saying lifting a ban on China’s second-largest telecommunications maker poses “a significant threat” to national security.

FILE PHOTO: The logo of China's ZTE Corp is seen on the building of ZTE Beijing research and development center in Beijing, China June 13, 2018. REUTERS/Jason Lee

“ZTE, though publicly traded, is a state-backed enterprise that is ultimately loyal not to its shareholders, but to the Chinese Communist Party and Chinese government,” Senator Mark Warner, the Democratic vice chairman of the Intelligence Committee, and Marco Rubio, a Republican member of the committee, said in a letter to Trump.

Several members of Congress, including some of Trump’s fellow Republicans as well as some Democrats, have been pushing to clamp down on ZTE and Huawei [HWT.UL], another Chinese telecommunications equipment firm, citing national security concerns.

The issue is one of the few on which the Republican-led Congress has veered from White House policies since Trump became president in January 2017.

Among other things, lawmakers are concerned that equipment from the companies could be used to spy on Americans. But other lawmakers support Trump’s deal with ZTE, saying it is the president’s prerogative to conduct foreign policy.

ZTE ceased major U.S. operations after the United States imposed a ban in April. The Commerce Department said the company had broken a prior agreement by making false statements about disciplining executives involved in illegally shipping U.S. goods to Iran and North Korea, which are subject to sanctions.

The maker of smart phones and networking gear agreed to pay a $1 billion penalty and put $400 million in escrow as part of a settlement it reached on June 7 with the Commerce Department to regain access to the U.S. market, which it needs for components.

The Senate paved the way for a showdown with Trump over the issue earlier this month, when it passed by 85-10 an annual defense policy bill including an amendment that would kill the White House’s ZTE deal.

Warner, who is also a member of the Senate Finance and Banking Committees, and Rubio, who is also on the Foreign Relations Committee, announced their letter shortly before the Trump administration said it opposed the ZTE provision in the National Defense Authorization Act, or NDAA.

Reporting by Patricia Zengerle; Editing by Bill Berkrot

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