Trump administration is telling Congress it has an agreement to save China's ZTE: Reports

Key Points
  • The Trump administration is telling lawmakers it has reached an agreement to aid Chinese telecom firm ZTE,according to The New York Times and Reuters.
  • The possible deal could include a financial penalty and management changes, as Trump described earlier this week.
  • The news comes as the U.S. and China are trying to cement a trade deal to avoid potentially damaging tariffs.
White House reaches deal with ZTE: NY Times
White House reaches deal with ZTE: NY Times

President Donald Trump's administration is telling Congress it has come to an agreement to boost Chinese telecommunications company ZTE, The New York Times and Reuters reported.

As part of the deal, ZTE would pay a financial penalty, revamp its management and hire American compliance officers, the Times reported, citing a person familiar with the matter. The U.S. would scrap a ban on the company buying American products under the agreement, the newspaper said. It is unclear how firm the reported deal is at this point.

The outline reported by the Times appears to fall in line with some steps Trump said he could take to help ZTE get back into business. On Tuesday, the president said he envisioned "a large fine of more than a billion dollars," new "management, a new board and very, very strict security rules." He added that he would want ZTE to "buy a big percentage of their parts and equipment from American companies."

An agreement to revive ZTE, which has argued the U.S. penalties would cripple its operations, could possibly help critical trade talks between the U.S. and China. Trump has called the ZTE negotiations part of broader talks to address alleged Chinese trade abuses, though top advisors have labeled ZTE an "enforcement" issue. Washington and Beijing are trying to cement a deal that would avoid potentially damaging tariffs.

Trump has said he agreed to help the firm, a major smartphone supplier in the American market, at the request of Chinese President Xi Jinping.

The prospect of a deal to aid the phone maker has prompted bipartisan criticism from Capitol Hill. Many lawmakers have argued any deal would hurt national security because the U.S. government was punishing the firm for violating sanctions on Iran and North Korea. Some members of Congress have also contended the firm's equipment poses a cybersecurity risk.

Earlier this week, the Senate Banking Committee overwhelmingly passed an amendment introduced by Sen. Chris Van Hollen, D-Md., to limit Trump's ability to remove the penalties on ZTE. Following the Times report Friday, Van Hollen told NBC News "there's strong bipartisan resistance to this idea of the president trading away" national security considerations.

The senator said the Senate will vote on the measure as part of a defense authorization bill when it returns to Washington next month. Van Hollen warned an agreement could compromise U.S. efforts to force North Korea to abandon its nuclear and missile programs, largely through sanctions.

"Giving a break to ZTE undermines our maximum pressure sanctions effort against North Korea," he said.

In a statement, Senate Minority Leader Chuck Schumer, D-N.Y., contended the deal would help to "make China great again" and "would not protect America's economic or national security." He said "both parties in Congress should come together to stop this deal in its tracks."

House Minority Leader Nancy Pelosi, D-Calif., called the reported agreement a "stunning betrayal of the American people." In a statement, she contended that Americans "deserve better than a President who is eager to sell out the American people and our national security for his personal enrichment."

Sen. Marco Rubio, R-Fla., a frequent critic of Trump's push to save ZTE, called the reported agreement a "great deal" for ZTE and China. "Now Congress will need to act," he tweeted.

Rubio tweet: Yes they have a deal in mind. It is a great deal... for #ZTE & China. #China crushes U.S. companies with no mercy & they use these telecomm companies to spy & steal from us. Many hoped this time would be different. Now congress will need to act.

White House press secretary Sarah Huckabee Sanders would not confirm any possible deal terms. She said the Trump administration wants to make sure ZTE is "held accountable."

— CNBC's Eamon Javers contributed to this report