Bipartisan Bill Introduced to Ban Sale of US Tech to Chinese Companies

Bipartisan Telecommunications Denial Order Enforcement Act (H.R. 7255) was introduced today by Rep. Mike Gallagher (R-WI), Sen. Tom Cotton (R-AR), Sen.r Chris Van Hollen (D-MD), and Rep. Ruben Gallego (D-AZ) to impose a ban on selling US technology to Chinese companies in violation of sanctions laws and export control.

As detailed in the press release, the “Telecommunications Denial Order Enforcement Act” follows the apprehension of the Huawei chief financial officer Meng Wanzhou in Canada after U.S. law enforcement agencies requested her arrest because of allegedly evading U.S. sanctions against Iran.

According to Senator Chris Van Hollen (D-MD):

Huawei and ZTE are two sides of the same coin. Both companies have repeatedly violated U.S. laws, represent a significant risk to American national security interests, and need to be held accountable. Moving forward, we must combat China’s theft of advanced U.S. technology and their brazen violation of U.S. law

Furthermore, according to Representative Mike Gallagher (R-WI), Chinese telecommunications companies represent an increasing threat to the U.S. national security, as well as an “intelligence-gathering arm of the Chinese Communist Party” as stated by Senator Tom Cotton (R-AR).

The Huawei Technologies Company and the ZTE Corporation together with any affiliates or subsidiaries are the two firms directly named in the bill as being covered by the proposed legislation, as well as any other telecom company domiciled in People’s Republic of China, as first reported by Reuters.

Measures included in the Telecommunications Denial Order Enforcement Act include: 

  • Establishing that it is U.S. policy to enforce denial orders banning the export of U.S. parts and components to Chinese telecommunications companies that have violated U.S. export control laws or sanctions.
  • Directing the President to impose the same strict penalties originally faced by ZTE on any Chinese telecommunications firm found to be in violation of U.S. export control laws or sanctions.
  • Ensuring that penalties for violating U.S. export control laws or sanctions are not withdrawn until a pattern of compliance and cooperation over the course of a year proves that policies surrounding systematic lawbreaking by Chinese telecommunications firms have been changed.
  • Prohibiting any executive agency official from modifying any penalty imposed on Chinese telecommunications companies, their agents, or affiliates until the President certifies that the company has not violated US laws for one year and is cooperating fully with U.S. investigations.
  • Highlighting the Congressional role in overseeing Executive Branch export control and sanctions determinations regarding Chinese telecommunications companies.

Chinese companies have previously experienced bans in the U.S., with ZTE being barred from purchasing goods from U.S. companies in April 2018 because of violating Iran and North Korean sanctions.

The ZTE ban was reinstated during June 2018 after it was lifted following a fine of $1 billion on the Chinese vendor, while Huawei was cited in two separate bills seeking to ban US government agencies from buying, using, or contracting Chinese-made telecom tech or services in February 2018.

Huawei and ZTE were also previously banned by the Australian government during August 2018 from providing hardware equipment for the country’s 5G network after Australia’s lawmakers passed the Telecommunications Sector Security Reforms which allows the state to intervene when there are significant national security concerns.

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