China Sanctions Excluded From Defense Authorization Act

China gets off relatively easy in the latest Defense Authorization Act. The bill includes a government ban on data-sharing devices but excludes the sanctions which crippled telecom giant ZTE.

The sanctions barred US companies from doing business with ZTE, which violated trade agreements by selling US technology to Iran and North Korea. ZTE paid a massive $1.19 billion civil and criminal penalty for its dirty dealings, and after the telecom giant failed to enact corporate restructuring, the US imposed the sanctions for seven years.

ZTE relies on American firms for 25% of its components, so the effect was immediate – last year, ZTE “ceased major operations,” and they declared a $1-1.3 billion net loss for the first half of 2018.

After another $1.4 billion fine this year (and a promise to replace ZTE's leadership), the sanctions were lifted.

But this rankled politicos from both sides, and the Senate amended the National Defense Authorization Act to reinstate the Chinese embargo.

Regarding the fine, Sen. Marco Rubio (R-Florida) said, “This 'deal' with #ZTE may keep them from selling to Iran and North Korea … but it will do nothing to keep us safe from corporate and national security espionage.”

Trump, for his part, claimed the ban resulted in “too many jobs...lost,” and he vowed to work with China's President Xi to give ZTE “a way to get back into business, fast.”

The latest Defense Authorization Act bars government employees from using ZTE or Huawei devices used to route or view user data, but it completely excludes any further sanctions. ZTE and Huawei phones were previously banned from military base retailers.

What do you think? Should Chinese telecom giants face stiffer penalties?