Congress is abandoning an effort to clamp down on the Chinese telecom giant ZTE in a defence bill, essentially green-lighting the Trump administration's deal to save a company that was accused of selling sensitive information to hostile regimes, aides have said.
Senators from both parties expressed outrage that the revised defence legislation, which will be unveiled early next week, guts a provision to reinstate penalties and restrict the Chinese company's ability to buy US component parts.
ZTE was almost forced out of business after being accused of selling sensitive information to nations hostile to the US, namely Iran and North Korea, in violation of trade laws.
President Donald Trump in May warned the ban was causing heavy job losses in China and said he had discussed the matter with Chinese President Xi Jinping. The Commerce Department reached a deal with ZTE to lift the ban in June, allowing the company's business with the US to resume.
Republican Senator Marco Rubio, an architect of the anti-ZTE language in the defence bill, said on Twitter he was surprised that House and Senate leaders negotiating the compromise "caved so easily".
Democratic Senator Mark Warner of Virginia called the outcome "a huge mistake." "Beyond frustrated that Republican leaders are caving to the Trump Administration's demands on ZTE. This can only make our country less safe," he tweeted.
Both lawmakers are members of the Senate intelligence committee and have raised concerns about the Chinese company and the White House's approach to it.
Congress was pressured by the White House to yield, with the administration making clear to lawmakers that it viewed the language as tying its hands, according to a source granted anonymity because they were not authorized to discuss the negotiations.
The Republican-controlled Senate had tucked the ZTE language into the annual defence bill this summer, delivering a rare rebuke of the White House after it eased up on the telecom company. While the House version of the defence bill blocked the US government purchases and contracting with ZTE, the Senate version went further, reinstating penalties on the company and blocking export provisions.
An aide said the group of House and Senate lawmakers who were appointed to negotiate a compromise between the two bills thought the Senate went too far in inserting Congress into the administration's decision-making.
House Armed Services Committee Chairman Mac Thornberry viewed it as a separation of power issue. The aide was granted anonymity because the person was not authorised to discuss the talks.
Senate Democratic Leader Chuck Schumer said the outcome was just another example of Trump "being weak" against foreign leaders "while Republicans just follow along."
Schumer said, "By stripping the Senate's tough ZTE sanctions provision from the defense bill, President Trump - and the Congressional Republicans who acted at his behest - have once again made President Xi and the Chinese Government the big winners and the American worker and our national security the big losers."
The Commerce Department barred ZTE in April from importing American components for seven years after concluding that the company deceived US regulators after settling charges last year of sanctions violations.
The decision amounted to a death sentence for ZTE, which relies on US parts. The company quickly announced it was halting operations. The ban also hurt American companies that supply ZTE. But the US and China reached a deal that allows ZTE to stay in business in exchange for paying an additional $1 billion in fines and agreeing to let US regulators monitor its operations.
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