The fiscal 2019 defense authorization bill appears on a clear path to becoming law after conferees hashing out a conference agreement opted to strip out a provision opposed by President Trump. The section, part of the Senate’s version of the annual policy bill, would have preserved a seven-year ban on U.S. exports to Chinese telecommunications company ZTE Corp. The government initially imposed the ban on ZTE for violating U.S. sanctions on sales to North Korea and Iran. The administration relaxed the sanctions on ZTE in June, though, saying they were so severe they jeopardized the company’s survival.
The House and Senate versions of the authorization bill both included language banning ZTE sales to the federal government, but only the Senate version would have prevented the administration from lifting the seven-year ban on sales of U.S. components to ZTE. The conference agreement includes a House provision banning U.S. federal government contracts with ZTE or Huawei Technologies Co., another Chinese company, reports CQ.
On Tuesday, House Armed Services Committee leaders Mac Thornberry (R-Texas) and Adam Smith (D-Wash.) said one of the primary challenges to retaining the Senate language was replacing the $1 billion fine the Commerce Department levied on ZTE in June to take the place of the original sanctions, reported Politico. “Everyone on the conference committee wanted to maintain the ZTE provisions, but in order to do that…we had to come up with a billion dollars because if we nixed the deal, ZTE would not give us the billion dollars,” Smith told the House Rules Committee.
The House is on track to adopt the conference agreement Thursday before leaving for August recess. Thornberry was forced to file a new version of the conference report Wednesday to resolve concerns over a provision affecting revenues, reported CQ. That section dealt with sanctions under the 1987 Intermediate-Range Nuclear Forces Treaty and would have violated the constitutional requirement that revenue bills originate in the House. The Senate will remain in session and is expected to take up the agreement shortly.