May 25, 2018, 8:27 PM ET

Trump administration lifts penalties on Chinese telecom suspected of espionage

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The Trump administration has reached a deal with Chinese telecom ZTE to lift economic sanctions on the firm, a move likely to frustrate much of Congress, two sources familiar with the arrangement have confirmed to ABC.

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The Commerce Department will lift a seven-year ban on ZTE’s ability to buy American parts, which was imposed after the company violated U.S. sanctions and did business with Iran and North Korea. The U.S. government is also concerned that the state-backed company was using its devices to spy on users.

In a statement, a White House official said, “This is a law enforcement action being handled by Commerce. We are making sure ZTE is held accountable for violating U.S. sanctions, pays a big price, and that we are protecting our security infrastructure and U.S. jobs.”

The effect of the action, however, weakens the existing sanctions on ZTE. The U.S. will instead require the company to pay a fine, install U.S. compliance officers and change board members.

A spokesperson for the Commerce Department did not immediately respond to a request for comment. President Donald Trump has asserted that loosening sanctions on ZTE will strengthen the U.S. hand in broader trade negotiations with China and lead to China purchasing more American goods. Trump had previously tweeted that China was willing to increase agricultural imports from the U.S.

Earlier this week, as President Trump tweeted his intention to execute this agreement, GOP Sen. Marco Rubio warned that the new deal would not be enough to change ZTE’s bad behavior. The U.S. has already fined the company $1.2 billion.

“We're basically saying, we're going to give you the same deal you violated the first time, and by the way you can keep spying,” Rubio told ABC in an interview Tuesday.

Democrats were also quick to condemn the move. House Democratic Leader Nancy Pelosi, D-Calif., issued a statement linking the agreement to contemporaneous reports that China had agreed to fund the construction of a Trump-linked hotel in Indonesia, which White House officials have dismissed as unrelated.

“The President’s ZTE deal is a staggering betrayal of the American people,” Pelosi said. “Although Trump pledged to fight for hard-working Americans, he is now using U.S. government resources to enrich a foreign company – right after the Chinese government reportedly agreed to funnel half a billion dollars into one of his family’s resorts.”

Friday evening, Trump responded in a series of tweets saying "Dems do nothing but complain and obstruct."

Congress has already taken additional steps to block ZTE’s influence in the United States. A measure blocking the military from working with contractors that use ZTE devices and networks will likely soon pass as part of its annual defense authorization bill, and the Pentagon has already banned the sale of ZTE devices on U.S. bases.

House and Senate committees are also working on bills to prohibit the Trump administration from unilaterally lifting the seven-year ban on ZTE’s ability to purchase U.S. supplies. The Senate measure, introduced by Sen. Chris Van Hollen, D-Md., passed the Banking Committee Tuesday by an overwhelming margin.

Congress is also exploring ways to expand the U.S. government’s ability to review foreign transactions through the Committee on Foreign Investment in the United States (CFIUS). The Banking Committee also approved a bill by Sen. John Cornyn, R-Texas., that would do just that.

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  • flatrock

    Well Pelosi shows once again that she the facts have no relevance to her. The Chinese government gave a loan to the partially government owned Construction company that is doing construction work at the resort. It is not a Trump owned resort. It will contain a hotel and golf course which will license the Trump name and for which the Trump Organization will provide management services, but they won't own those either. Nor is the Chinese construction company building the hotel or golf course. Nor is thwre the slightest reason to believe that the Trump Organization would have had any input on or receive any benefit from the choice of construction companies for parts other parts of the resort.
    They are very small players in this massive resort project.

  • mrphilbert

    If this were the revolutionary war era, drumpf would have tipped off the British for a bribe.

  • mrphilbert

    Here's an idea. The American people could contribute to a gofundme campaign to get drumpf to actually work for us. It would have to be pretty substantial though as he has made it pretty clear that he will go with the highest bidder.

  • No one you know

    Actually Donald, it is YOU that is the laughingstock of the world.

  • Krimson

    Trump: Made in China

  • NuuJuce

    Trump just LOVES the Chinese. Chinese steel in his buildings, Chinese hats and shirts at his rallies, Chinese sanctions eased off. I just wished he loved America as much. Oh well.

  • kritikosman

    ZTE! ZTE! ZTE!

  • FlorMedDoc

    The military sent out a warning to all their soldiers warning them not to purchase any electronics made by ZTE because of security concerns.

    What is wrong with the President and who paid him off

  • Powderedtoastman

    Thanks to the $500 million bribe the Chinese gave to Trump for his hotel project.

    The crook doesn't even try and hide it anymore, because he knows thr GOP will let him do whatever he wants.

  • TexasVulcan

    Aggravate and alienate our allies, embolden our enemies. Great policy.

  • Morgan O'Rourke

    What will it take for the Republicans to act?

  • mrphilbert

    It was never going to be an America first foreign policy. It is much worse. It is a drumpf first foreign policy (and domestic policy). We have a third world dictator wannabe in the whitehouse and the entity that is constitutionally tasked with the remedy just sits on its hands.

  • Thao D

    Mr.Obama knew ZTE that is bad company.Mr.Obama was face North Korea and the south china sea.So he did not want to know ZTE.Mr.Trump want to sell
    the corns and soybean for china.So china has used to north korea for the trade

  • Jim Enright

    Trump’s pumpers are oddly absent from this story. Couldn’t have anything to do with him grabbing ankle for the Chinese could it?

  • Jim S

    Trump sold our national security for 500 million in his pocket.

  • helicohunter

    The Chinese totally played him.

  • Save America from Ourselves

    Is there nothing this lying sack of human waste will not take credit for? What was the Obama Administration supposed to do? This is a Chinese company not a US company. Once the abnormalities were discovered, under Obama, a plan was developed for sanctions/fines which were implemented March 7, 2017. Trump didn't officially take office until Jan 20, 2017 and Secretary of Commerce Wilbur L. Ross, Jr. on Feb 28, 2017.

    Soooo, Trump wants everyone, mostly his ignorant base, to believe Wilbur investigated, discovered, developed, and implemented the sanctions/fines for a world wide complex industrial impropriety in 7 days. RIIIIGHT!! And we all know blow hard doesn't read intel reports.

    Of course, what he didn't bother to disclose was that ZTE violated the terms set in March 2017 and on April 16, 2018, the Department of Commerce banned U.S. companies from providing exports to ZTE for seven years. Now he wants to reverse the ban, wonder why?? At least there are some sensible persons in Congress trying to block it.

    Stop believing anything this -|MORON|- says or tweets. He doesn't know how to tell the truth.

  • Peter Pant

    wow the chinese bribe did work. drumpf was worried the chinese are losing their job, america needs to help ZTE, and china also needs to invest in that theme park in jakarta to be named trump!!!! this president makes me SICK!

  • tet1953

    The clock is ticking, GOP. Do something about this treasonous dictator wannabe and you just might save your own sorry butts in November. Probably not though.

  • mollydtt

    The irony is that these are actual security risks. Even (gasp!) real spies. Trump is a moron and a danger to the U S.

    By extension, his GOP supporters are, too.

  • Dave Brantley

    Done

  • Prophet With Honor

    Bought and paid for...

  • Red Hawk

    Trump is appeasing America's enemies for his own personal profits