It may have been painted as ZTE’s lifesaver but the $1 billion deal it signed with the US government may prove to be even more trouble. The agreement would naturally incur a lot of changes on ZTE’s part, but that is if it will actually push through. The US Senate has just voted 85 to 10 to pass an annual defense policy bill that, among other things, included a provision that would block the Trump administration’s deal with ZTE in the interests of national security.
The US Commerce Department imposed a rather heavy ban on ZTE after it was found to have lied about its sanctions on employees that violated an earlier trade embargo on Iran and North Korea. The new ban would have lasted seven years and would practically shut down ZTE by depriving it of access to US technologies like Qualcomm’s processors or Google’s Android OS.
In contrast, Trump’s deal with ZTE, after a personal request from Chinese President Xi Jinping, is a slap on the wrist. The company would pay $1 billion, minimum, and change its board and have American compliance officers. Right from the get-go, lawyers from both sides of the political fence have slammed the deal, accusing the US president of endangering national security in favor of stronger ties with China.
In a rare move, the US Senate, dominated by Trump’s own political party, is publicly showing its disagreement and taking concrete action against the deal. While Republican lawmakers have disagreed with the president in the past, this is the first time they’ve actually taken steps to block his administration.
Of course, the story is far from over. Trump’s administration already vowed to fight the Senate’s move. But even before that, both houses of Congress will still have to fight over the amendments that the Senate inserted into the bill, which is absent from the version that the House passed. Expect nothing short of a political drama in the months ahead.