UPDATED 22:48 EDT / JUNE 07 2018

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Congress moves to block Trump administration deal with ZTE

Congress, led by bipartisan legislation being pushed in the Senate, is attempting to block a deal between the Trump administration and Chinese electronics maker ZTE Corp. that was only agreed to early Thursday morning.

The long-rumored deal, pushed as a way to improve trade relations between the two countries, will see ZTE pay a new $1 billion fine and place $400 million more in escrow, the latter to be forfeited should ZTE again run afoul of U.S. regulations.

In addition, the deal requires ZTE to change its senior management and board of directors in 30 days and appoint a compliance team to oversee the company’s activities.

In return, ZTE once again gains access to U.S. technology that it had been banned from accessing in April after the Department of Commerce ruled that the company had breached a previous agreement in regards to the sale of the technology to countries such as Iran and North Korea. As a result of the initial ban, the company announced May 9 that it was ceasing operations, a major blow given that it is China’s second-largest electronics manufacturer with 75,000 employees.

Despite the benefits of the deal, including China promising to approve Qualcomm Technologies Inc.’s acquisition of NXP Semiconductors N.V in an unofficial quid pro quo, lawmakers hate the deal and are promising to block it.

In what could be the first of numerous attempts to block the deal, Republican and Democratic senators have introduced legislation to block the deal taking place. According to Reuters, the measure would restore penalties on ZTE for violating export controls and bar U.S. government agencies from purchasing or leasing equipment or services from ZTE or Huawei Technologies Co. Ltd., another Chinese company that has gained the attention of lawmakers and the Department of Justice.

An “overwhelming majority” of the Senate is united against the Trump administration’s deal to end sanctions on China’s ZTE – and will “absolutely” try to block the agreement, Senator Mark Warner (D-Virginia) told CNBC. “This is an awful, awful deal… [and] is not something that you should trade in Mr. Trump’s trade war,” he added.

The legislation is an amendment to the National Defense Authorization Act that would reinstate the earlier penalties until “the president makes certain certifications to the Congress,” the report noted, giving the deal a possible way to move forward, be it unlikely given the overwhelming hatred of it expressed by both sides of politics.

Traditionally, laws passed by the Congress need to be signed off by the president himself, a decision he can choose not to do with a veto. But Senator Marco Rubio (R-Florida) has previously stated that legislation to block the deal would be “veto-proof.” In the event that the bill is vetoed by the president, two-thirds of the Senate and House of Representatives can vote to override the veto, making the legislation law.

Photo: Kārlis Dambrāns/Flickr

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