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Congress Drops Bid To Crack Down On ZTE Over Iran Sanctions Violations

Congressional aides say legislators are abandoning an effort to crack down on Chinese telecom giant ZTE, deferring to a White House deal to save the company despite accusations that it violated U.S. sanctions and sold sensitive technology to Iran and North Korea.

A provision reimposing tough sanctions on the company on July 20 was dropped from a massive defense policy bill that House and Senate negotiators are drafting, provoking outrage from senators who had sponsored the Senate's provision to get tough on the company.

ZTE was almost forced out of business when the Commerce Department in April barred the company from buying components for its cells phones and other equipment from U.S. suppliers, citing alleged violations of U.S. sanctions against Iran and North Korea.

The company's move to shut down operations -- potentially destroying thousands of jobs in China and the United States -- prompted President Donald Trump in May to negotiate a new deal to save the company with Chinese President Xi Jinping.

The White House announced in June that it would lift the ban on ZTE, allowing the company to stay in business, if it paid another $1 billion in fines for its alleged sanctions violations and shake up its management.

In recent days, the company has moved to comply with the new deal, prompting the department to lift the ban.

Republican Senator Marco Rubio, an architect of the anti-ZTE language in the Senate's version of the defense bill, said on Twitter he was surprised that House and Senate leaders negotiating over the bill "caved so easily" to the White House's wishes.

Democratic Senator Mark Warner called the removal of the penalties on ZTE "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.

But Congress was pressured by the White House on the matter, with lawmakers saying the administration demanded removal of the Senate ZTE provision, which would have essentially reversed the White House reprieve for the company.

The House version of the defense bill is not as punitive on the company, requiring only that the U.S. government refrain from purchasing anything from ZTE.

Senate Democratic Leader Chuck Schumer charged that the decision to defer to the White House was just another example of Trump "being weak" against foreign leaders "while Republicans just follow along."

"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," he said.

With reporting by AP and AFP