WASHINGTON – U.S. Sen. Mark R. Warner (D-VA), Vice Chairman of the Senate Select Committee on Intelligence and a member of the Senate Banking and Finance Committees, joined Senate colleagues in urging the Chairmen of the Senate and House Armed Services Committees to include a Senate-passed amendment cosponsored by Sen. Warner that would reinstate penalties against ZTE in their upcoming NDAA FY2019 Conference Report. Earlier this year, intelligence leaders testified before the Senate Intelligence Committee warning that ZTE, Huawei, and other Chinese state-directed telecommunications companies have the capacity for espionage and intellectual property theft, posing clear threats to the national security, people, and economy of the United States. This week, President Trump’s Commerce Department announced an agreement to lift the ban preventing Chinese telecom giant ZTE from doing business with American suppliers.

Additionally, Senators urged the conferees to include the reforms to the Committee on Foreign Investment in the United States (CFIUS), which were a part of the recently passed Senate NDAA bill. These reforms, also known as the Foreign Investment Risk Review Modernization Act (FIRRMA), would ensure that foreign investments in the U.S. do not pose a national security risk.

Sen. Warner, a former technology executive, has long expressed concern that ZTE poses a significant threat to our national security. He recently wrote to the administration urging President Trump to re-consider a deal with the China-based company.

The text of the letter to NDAA conferees can be found here and below:

Dear Chairmen McCain and Thornberry, and Ranking Members Reed and Smith:

We write to express our strong support for measures in the Senate-passed Fiscal Year 2019 National Defense Authorization Act (FY 2019 NDAA) that would reinstate U.S. government penalties against ZTE, a Chinese state-directed telecommunications company, and modernize the Committee on Foreign Investment in the United States (CFIUS).  As you begin deliberations over the final version of the FY 2019 NDAA, we request that you include these two measures.

Section 6702:  Prohibition on Modification of Civil Penalties under Export Control and Sanctions Laws and Prohibition on Certain Telecommunications Equipment.

We strongly oppose the June 2018 deal with ZTE negotiated by the Commerce Department’s Bureau of Industry and Security (BIS) to lift the seven-year ban against the export of U.S. parts and components to ZTE.  BIS imposed this seven-year ban and other penalties against ZTE in April 2018 in response to its numerous violations of U.S. export controls and sanctions laws. 

We also note that our nation’s six top intelligence leaders testified before the Senate Intelligence Committee in February 2018 about their concern that ZTE, Huawei, and other Chinese state-directed telecommunications companies are beholden to the Chinese government and Communist Party, which provides the capacity for espionage and intellectual property theft, and therefore poses clear threats to the national security, people, and economy of the United States.  

As you prepare the Conference Report, we therefore urge you to retain—and further strengthen—Section 6702 of the Senate-passed FY 2019 NDAA, which would not only reinstate the April 2018 penalties against ZTE and prohibit the modification of any penalties against a Chinese telecommunications firm unless certain conditions are met, but also prohibit the U.S. government from using or procuring equipment from, or entering into a contract with ZTE or Huawei. 

Title XVII:  Foreign Investment Risk Review Modernization Act of 2018

We also thank you for your work protecting our national security and intellectual property by ensuring that foreign countries are not engaged in illicit behavior when investing in the United States.

As you are aware, the Senate version of the FY 2019 NDAA includes important reforms to the Committee on Foreign Investment in the United States that were part of the Foreign Investment Risk Review Modernization Act (FIRRMA).  Those reforms are vital to protecting our national security and preventing intellectual property theft by foreign countries—including the People’s Republic of China. 

As you negotiate a conference report for the 2019 NDAA, we urge you to include the Senate-passed CFIUS reforms and ensure that the final language fully addresses our national security and competitiveness concerns.  We believe that efforts to weaken the robust protections in the FIRRMA will embolden our adversaries and present threats to our national security.

We thank you for your leadership, and we appreciate your consideration.

Sincerely,

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