Senate braces for Trump showdown over Chinese telecom giant

The Senate is speeding toward a confrontation with President Trump over his plan to revive the Chinese telecommunications giant ZTE.

Senators are poised to pass legislation as part of a mammoth defense bill on Monday evening to block the administration’s deal, despite fierce pushback from the White House.

Lawmakers raced to block the deal after the Commerce Department announced it had agreed to lift penalties against ZTE in exchange for the company paying a $1 billion fine and embedding a U.S.-selected compliance team into the firm.

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The administration’s plan quickly drew backlash on Capitol Hill and split Trump’s allies in the Senate, pitting the president against otherwise vocal supporters.

Top Trump officials were continuing to meet with lawmakers as recently as late last week to explain the details of the agreement in an attempt to salvage the deal.

Commerce Secretary Wilbur Ross has met twice with Senate Republicans to defend the administration’s thinking. Ross also defended the deal during a Thursday meeting with roughly 20 House Republicans, Rep. Thomas Massie (R-Ky.) told The Washington Post.

The meetings have done little to assuage concerns among many senators rattled by the agreement, arguing the U.S. should not revive a company that was previously sanctioned for doing business with Iran and North Korea.

“The secretary of Commerce essentially proposed the death penalty for them. They came back and offered serious concessions … which is akin to life without parole,” said GOP Sen. Tom Cotton (Ark.), one of Trump’s closest allies. “[But] I and every other senator believes the death penalty is the appropriate punishment.”

The legislation embedded in the Senate’s National Defense Authorization Act (NDAA) would keep in place penalties that were slapped on ZTE as part of a 2017 settlement for violating U.S. sanctions. It would also ban government agencies from buying or leasing telecommunications equipment and services from Chinese telecom firms Huawei and ZTE as well as ban the government from providing loans to or subsidizing either company.

GOP Sen. David Perdue (Ga.), who like Cotton aligns closely with Trump, tried unsuccessfully to strip out the ZTE language from the defense bill, arguing it violated the separation of powers between Congress and the White House.

“My goal … is to make sure America is the best place in the world to do business and we remain competitive with the rest of the world. This cannot happen if we tie the hands of our commander in chief during critical trade negotiations,” Perdue said during one of several floor speeches on the issue.

The looming fight between senators and the administration comes as Republicans have shown little interest in otherwise using legislation to challenge Trump’s trade decisions, arguing the often mercurial president would never sign such a bill and would instead likely lash out at members.

Republicans last week blocked legislation to require congressional approval for tariffs imposed under the guise of national security. And 14 GOP senators joined with nearly every Democrat to oppose giving Congress a vote on deals between U.S. and foreign firms that could impact national security.

The Senate’s move to vote on the measure Monday evening sets up a showdown with lawmakers in both chambers as well as the White House over the ZTE deal.

The Senate’s defense bill will need to be merged with a separate measure passed by the House. Though Trump hasn’t publicly weighed in on the issue, administration officials are signaling they want to get the provision removed from the final legislation during a conference committee.

“The administration will work with Congress to ensure the final NDAA conference report respects the separation of powers,” White House deputy press secretary Hogan Gidley said in a statement last week.

White House legislative affairs director Marc Short separately told CNBC that Trump views the ZTE deal as part of the larger negotiations over North Korea’s nuclear program, calling China “instrumental” in the talks so far.

Top Republicans are making no promises that the provision will stay in the bill if Trump personally lobbies lawmakers against it or issues a veto threat.

Republicans previously included controversial items in the NDAA despite veto threats from then-President Obama, but they would likely face enormous pressure to back down from a similar fight with Trump months before the November midterm elections.

“I support what we have in the House bill and basically that says the federal government shall not buy from ZTE, and I think that made good sense,” Rep. Mac Thornberry (R-Texas), the chairman of the House Armed Services Committee, told reporters.

Thornberry acknowledged he hadn’t read the Senate’s bill but predicted lawmakers would have to “grapple” with the ZTE language if it stretches beyond the jurisdiction of the Armed Services Committees.

The Senate has not announced which members will participate in the conference committee meant to hash out the differences between the two chambers’ bills.

But Perdue, a member of the Armed Services Committee, argued that “many” of his colleagues think “we can achieve a better result if we modify this short-sighted ZTE language in the final agreement between the House and Senate.”

Sen. Lindsey Graham (R-S.C.) said he is going to the White House to meet with Trump this week about the broader defense bill, but he expected the ZTE fight would come up.

“I’m going to support getting this bill passed in John McCain’s lifetime. He’s doing OK [but] I don’t want to play with this bill,” he said last week, referring to the Republican Arizona senator who is fighting brain cancer. “If it’s going to get the bill vetoed, I want to fix it.”

Still, supporters are showing no signs of backing down and allowing the language to be removed from the final bill, which has to pass both the House and Senate.

Cotton told reporters he thinks the provision will survive a conference with the House. He said he does not believe Trump will issue a veto threat over the trade fight because the NDAA includes other key defense priorities.

Pressed if Trump had told him he wouldn’t veto the bill, Cotton said he wouldn’t “discuss private conservations with the president.”  

Sen. Bob Corker (R-Tenn.) said supporters of the ZTE provision received a “wink and a nod” that Trump wouldn’t sink the defense bill if it blocked the administration’s agreement with China.

“I don’t think the president cares about ZTE. Someone told me that he gave them a wink and a nod and told them he didn’t care,” Corker added. “I think [Trump] did what he did for the Chinese leader but doesn’t really care what Congress does.”