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Trade War

White House poised to save ZTE deal ahead of Congress vote

Chinese cellphone maker poses national security risk, senators say

ZTE, one of the world's top 10 smartphone makers, has put production on hold after U.S. sanctions cut off its access to key technology.

NEW YORK -- The Trump administration is pushing back against Senate efforts to void an agreement that would end a ban on American technology exports to Chinese cellphone producer ZTE.

The deal under fire in the Senate, reached by the company and the Commerce Department last week, lifts the restriction after ZTE pays a $1 billion fine and puts an additional $400 million in escrow.

"This will ensure ZTE pays for its violations and gives our government complete oversight of their future activity without undue harm to American suppliers and their workers," deputy White House press secretary Hogan Gidley said in a statement on Wednesday.

The ban was imposed in April after the company violated American sanctions against Iran and North Korea and then misled the government about disciplinary action against employees.

Senators agreed on Monday to add language upholding the restriction to a must-pass defense spending bill that could be put to a vote within days.

The amendment also bars the U.S. government from leasing equipment or services from ZTE and fellow cellphone maker Huawei Technologies, along with prohibiting government grants and loans to subsidize them.

The administration "will work with Congress to ensure the final NDAA conference report respects the separation of powers," Gidley said in his statement, referring to the National Defense Authorization Act.

Republican Tom Cotton defended the amendment in the Senate on Wednesday, citing the danger posed by Huawei and ZTE to national security.

"These companies have proven themselves to be untrustworthy," Cotton said. "And at this point, I think the only fitting punishment would be to give them the death penalty -- that is, to put them out of business in the United States."

"Just as our maximum-pressure campaign brought North Korea to the table, strengthening our sanctions on ZTE will show China that we are finally serious about stopping its theft of our intellectual property, preventing it from infiltrating our communications network, and from violating the privacy rights of our citizens," he argued.

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