Van Hollen Announces Bipartisan ZTE Amendment on Defense Bill

Today, U.S. Senators Chris Van Hollen (D-Md.) and Tom Cotton (R-Ark.) announced a bipartisan amendment to the National Defense Authorization Act (NDAA) that would ensure that if the Trump Administration moves forward with their misguided attempted to let ZTE off the hook, the NDAA would stop them in their tracks. Senators Chuck Schumer, (D-N.Y.), Marco Rubio (R-Fla.), Richard Blumenthal (D-Conn.), Susan Collins (R-Maine), and Bill Nelson (D-Fla.) also cosponsored the amendment.

 

The amendment states that if the President lifts the Commerce Department’s export restrictions on ZTE before the NDAA is enacted, those restrictions will be automatically reinstated once the NDAA is signed into law. At that time, if President Trump still wants to pursue the deal, he must certify to Congress that ZTE has met certain conditions. This builds on Senator Van Hollen’s original amendment to prohibit the President from modifying penalties on sanctioned Chinese telecommunication companies like ZTE, which passed in the Senate Banking Committee with broad bipartisan support and was included in the base text of the NDAA.

 

“ZTE has violated U.S. laws time and again, which is why President Trump’s own Administration took action against the company. His deal to undo that action – and threaten our national security in order to protect Chinese jobs – cannot move forward. This amendment will ensure that, regardless of action the Administration takes right now, Congress will protect American interests and national security,” said Senator Van Hollen.

The amendment also would prohibit all U.S. government agencies from purchasing or leasing telecommunications equipment and/or services from Huawei, ZTE, or any subsidiaries or affiliates and would ban the U.S. government from using grants and loans to subsidize Huawei, ZTE, or any subsidiaries or affiliates.

 

 

AMENDMENT INTENDED TO BE PROPOSED BY MR. COTTON (for himself, Mr. VAN HOLLEN, Mr. SCHUMER, Mr. RUBIO, Mr. BLUMENTHAL, Ms. COLLINS, and Mr. NELSON) to the amendment (No. 2282) proposed by Mr. INHOFE

 

Viz:

Strike section 1727 and insert the following:

 

SEC. 1727. PROHIBITION ON MODIFICATION OF CIVIL PENALTIES UNDER EXPORT CONTROL AND SANCTIONS LAWS AND PROHIBITION ON CERTAIN TELECOMMUNICATIONS EQUIPMENT.

 

(a) Prohibition on Modification of Penalties.—

(1) IN GENERAL.—Notwithstanding any other provision of law, no Federal official may modify any penalty, including a penalty imposed pursuant to a denial order, implemented by the Government of the United States with respect to a Chinese telecommunications company pursuant to a determination that the company has violated an export control or sanctions law of the United States until the date that is 30 days after the President certifies to the appropriate congressional committees that the company—

(A) has not, for a period of one year, conducted activities in violation of the laws of the United States; and

(B) is fully cooperating with investigations into the activities of the company conducted by the Government of the United States, if any.

(2) REINSTATEMENT OF PENALTIES OR SUSPENDED ORDER.—

(A) IN GENERAL.—If, before the date of the enactment of this Act, any penalty imposed pursuant to the order of the Acting Assistant Secretary of Commerce for Export Enforcement entitled “Order Activating Suspended Denial Order Relating to Zhongxing Telecommunications Equipment Corporation and ZTE Kangxun Telecommunications Ltd.” (83 Fed. Reg. 17644), and dated April 15, 2018, is reduced or eliminated, or that order is suspended, on such date of enactment, that penalty shall be reinstated to the penalty in place before such reduction or elimination, or that order shall be reinstated, as the case may be.

(B) ADDITIONAL MODIFICATIONS.—Any modification to a penalty imposed pursuant to the order described in subparagraph (A) on or after the date of the enactment of this Act shall be subject to the requirements of paragraph (1).

 

(b) Prohibition on Use or Procurement.—The head of an executive agency may not—

(1) procure or obtain or extend or renew a contract to procure or obtain any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system; or

(2) enter into a contract (or extend or renew a contract) with an entity that uses any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.

 

(c) Prohibition on Loan and Grant Funds.—The head of an executive agency may not obligate or expend loan or grant funds to procure or obtain, extend or renew a contract to procure or obtain, or enter into a contract (or extend or renew a contract) to procure or obtain the equipment, services, or systems described in subsection (b).

 

(d) Effective Dates.—The prohibitions under subsection (b)(1) and subsection (c) shall take effect 180 days after the date of the enactment of this Act and the prohibition under subsection (b)(2) shall take effect three years after the date of the enactment of this Act.

 

(e) Rule of Construction.—Nothing in subsection (b) or (c) shall be construed to—

(1) prohibit the head of an executive agency from procuring with an entity to provide a service that connects to the facilities of a third-party, such as backhaul, roaming, or interconnection arrangements; or

(2) cover telecommunications equipment that cannot route or redirect user data traffic or permit visibility into any user data or packets that such equipment transmits or otherwise handles.

 

(f) Definitions.—In this section:

(1) APPROPRIATE CONGRESSIONAL COMMITTEES.—The term “appropriate congressional committees’” means—

(A) the Committee on Banking, Housing, and Urban Affairs and the Committee on Foreign Relations of the Senate; and

(B) the Committee on Financial Services and the Committee on Foreign Affairs of the House of Representatives.

(2) COVERED FOREIGN COUNTRY.—The term “covered foreign country” means the People’s Republic of China.

(3) COVERED TELECOMMUNICATIONS EQUIPMENT OR SERVICES.—The term “covered telecommunications equipment or services” means any of the following:

(A) Telecommunications equipment produced by Huawei Technologies Company or ZTE Corporation (or any subsidiary or affiliate of such entities).

(B) Telecommunications services provided by such entities or using such equipment.

(C) Telecommunications equipment or services produced or provided by an entity that the Secretary of Defense, in consultation with the Director of the National Intelligence or the Director of the Federal Bureau of Investigation, reasonably believes to be an entity owned or controlled by, or otherwise connected to, the government of a covered foreign country.

(4) EXECUTIVE AGENCY.—The term “executive agency” has the meaning given the term in section 133 of title 41, United States Code.

 

(g) Treatment of Provision Relating to Prohibition on Certain Telecommunications Equipment.—Section 891, relating to a prohibition on certain telecommunications equipment, shall have no force or effect.

 

 

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