[Congressional Record Volume 164, Number 84 (Tuesday, May 22, 2018)]
[Senate]
[Pages S2804-S2805]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                                  ZTE

  Now, on the issues that I came to speak about here, Mr. President, it 
was reported by the Wall Street Journal that the Trump administration 
has agreed to relax sanctions on the Chinese telecom giant ZTE and 
remove the ban on ZTE from selling components and software in the 
United States. Instead, ZTE will be required to pay a fine and 
reorganize its board. It appears that, in exchange, China will lift 
some tariffs on U.S. agricultural products.
  First, let me say this. I said this repeatedly, but I will say it 
again. I feel much closer in my views on China and how they treat us in 
terms of economic issues to President Trump and his views than I was to 
President Obama and President Bush and their views, who I don't think 
did enough. I had public arguments with both President Obama and 
President Bush on this issue.
  When Donald Trump started talking about going after China and making 
them play fair, I felt that was a good thing. When his administration 
fined ZTE and then put sanctions on them so they couldn't get American 
components, I said: Finally, we are doing something tough on China.
  You can imagine my disappointment with the reports last night that 
President Trump, being advised so wrongly by people like Treasury 
Secretary Mnuchin, is backing off on this toughness and just giving 
them a slap on the wrist, a fine. If the reports are true, the Trump 
administration will have suffered a great defeat. The fines and board 
changes do absolutely nothing to protect American national or economic 
security.
  It is my view that China proposed this because they know it doesn't 
do the real job. When President Trump shows weakness and backs off on 
the area where he has been toughest with China, it signals to them that 
they can roll over us issue after issue, where they have been rapacious 
in terms of how they deal with our economy, our intellectual property, 
and the ability of great American companies not to sell things in 
China.
  The April 2018 commerce order penalizing ZTE says plainly that past 
fines have not and will not deter ZTE because they are financially 
backed by China's government and putting in place board changes doesn't 
coerce a company that takes its orders from China's Government.
  The proposed solution is like a wet noodle. It is outrageous. I hope 
that Democrats and Republicans will join together in making sure, as 
House Republicans did in the Appropriations subcommittee, that the 
proposed sanctions against ZTE of not letting them buy American 
products and not letting them sell here will stick, but I don't think 
they will. All the handwriting is on the wall.
  I will not divulge anything, but I did have a half-hour conversation 
with President Trump about this on Friday and with some of his 
advisers. So I am truly worried.
  The penalties that are proposed by Secretary Mnuchin are penalties in 
name only. They are a diversion from the fact that it seems President 
Xi has outmaneuvered President Trump and Secretary Mnuchin. It should 
be President Xi who writes the book ``The Art of the Deal'' because he 
has taken us to the cleaners on ZTE.
  Let me explain why this is such a bad deal. ZTE was sanctioned in 
2016 for violating U.S. sanctions against North Korea and Iran. The 
company was further sanctioned when the Commerce Department discovered 
that ZTE had lied to the United States about its plans to rectify the 
violations. President Trump and Secretary Mnuchin, according to 
reports, have inexplicably

[[Page S2805]]

excused ZTE of these inexcusable violations.
  What the President and Secretary Mnuchin are doing sends a dangerous 
signal to businesses around the world that the United States is willing 
to forgive sanction violations or reduce penalties. It emboldens 
foreign companies to play fast and loose with U.S. sanctions when we 
should be putting the fear of God into these companies, especially one 
that is as brazen as ZTE. If we don't uniformly enforce sanctions--a 
critical diplomatic tool used by administrations of both parties to 
pressure our adversaries--then, they will be far less effective. None 
other than Secretary of State Pompeo and Interior Secretary Zinke wrote 
a letter to President Obama in 2016 making this point, urging him to 
crack down on ZTE for this reason.
  Imagine if Obama were President today and doing this? You can be sure 
that our Republican colleagues would be hollering. You can be sure that 
President Trump--he wouldn't be President then--would be hollering.
  Even more important are the national security implications of 
removing the ban on U.S. companies selling ZTE components and software. 
This is the No. 1 reason that I am opposed to any change in the 
sanctions against ZTE. Allowing ZTE to make deals with U.S. companies 
to sell its products here would allow a foreign, state-backed firm 
access to our telecommunications network, prying open the door for ZTE 
to steal American data, hack our networks, and even conduct espionage, 
both economic and national security.
  Don't take it from me. Here are what some of our leading Republicans 
have said in the administration.
  The Republican-led FCC has said that allowing ZTE into the United 
States would pose a national security threat, saying it would give 
state-backed Chinese companies ``hidden backdoors to our networks'' 
that would allow them to ``inject viruses and other malware, steal 
Americans' private data, spy on U.S. businesses, and more.''
  We all know that China is involved in stealing our intellectual 
property. There is no better way to do it than through ZTE, and we are 
going to let them be here and slap them on the wrist with a fine? That 
is a dereliction of our duty here in the Congress and the President's 
duty to protect us.
  The Pentagon has banned ZTE phones, saying in a statement that ``ZTE 
devices may pose an unacceptable risk to the Department's personnel, 
information, and mission.'' If our Defense Department is banning these 
phones, why are we allowing them to come into our country to do 
industrial espionage and steal our intellectual property from our 
companies?

  Here is what FBI Director Chris Wray, appointed by President Trump, 
told the Senate Intelligence Committee in February. He was saying that 
we shouldn't use ZTE products or services, period. Here is what he 
said:

       We're deeply concerned about the risks of allowing any 
     company or entity that is beholden to foreign governments 
     that don't share our values to gain positions of power inside 
     our telecommunication networks. That provides the capacity to 
     exert pressure or control over our telecommunications 
     infrastructure. It provides the capacity to maliciously 
     modify or steal information. And it provides the capacity to 
     conduct undetected espionage.

  The head of the FBI says letting ZTE in here will provide ``the 
capacity to conduct undetected espionage.''
  After all those statements and so many more, every American should be 
alarmed by the reports that President Trump may allow ZTE into American 
markets. Putting our national security at risk for minor trade 
concessions is the very definition of shortsighted. Frankly, it would 
be a capitulation on the part of the Trump administration.
  President Trump's instincts are to be tough on China. He should not 
let Secretary Mnuchin lead him astray, or others in the administration 
who may be urging it. I know that there are some--Mr. Lighthizer and 
Mr. Navarro--who understand the dangers here, and they are in the 
administration too. From press reports, they are arguing on the other 
side.
  President Trump ought to come to his senses and stick with being 
tough on ZTE, stick with his instinct.
  That is what I say to you, Mr. President. Please stick to your 
instincts and be tough on ZTE. Don't let these other members of your 
Cabinet lead you astray for short-term reasons that will hurt America 
dramatically in the long run.
  The deal President Trump seems to be making is exactly the kind of 
deal that Donald Trump, before he was President Trump, would call weak 
or the worst deal ever. I hope these reports aren't true, but if they 
are, Democrats and Republicans must do something about it.
  I know there are Members on the other side--I saw Senator Rubio's 
tweets this morning--who are concerned about the national security of 
the United States with respect to ZTE. I will be reaching out to my 
Republican colleagues and to Members of my caucus and to anyone who is 
willing to turn this ship around to see what we can do legislatively.
  The Chinese are worried about their security. It is a different type 
of security. They don't want their citizens to get information. So they 
exclude our best companies, our Googles, and our Facebooks. Now they 
are raising a fuss when we want to exclude ZTE, which has violated our 
sanctions and would allow the Chinese Government to spy on us--what 
hypocrisy. Are we going to go along with that? I hope not.