The proposed bipartisan legislation follows violations of U.S. sanctions by Chinese telecom giant ZTE and recently alleged against Huawei.
“Chinese telecommunications firms like Huawei represent a growing threat to American national security. As state-directed enterprises, they ultimately report to the Chinese Communist Party and will be employed where and whenever possible to undermine American interests and those of our allies,” said Rep. Mike Gallagher, R-Wis., in a statement.
Under the legislation, he said, “If a Chinese telecommunications firm is found to have violated U.S. sanctions moving forward, it will be subject to the same severe punishment originally imposed on ZTE.”
Last year, ZTE completed $1.4 billion penalty payments to the U.S. government and was forced to make changes to its corporate management before the U.S.-imposed export ban was lifted against the company in August. The settlement agreement also required ZTE to retain a team of special compliance coordinators selected by and answerable to the U.S. Commerce Department’s Bureau of Industry and Security (BIS) for 10 years.
The ZTE export ban was a heavy blow to both the Chinese company and U.S. semiconductor firms. At the time of violations, It was estimated that ZTE sourced about 60 percent of the materials and components for its smartphones from U.S. suppliers.
In addition to Gallagher, the other sponsors of the bill include Rep. Ruben Gallego, D-Ariz., and Sens. Tom Cotton, R-Ariz., and 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,” Van Hollen said. “Moving forward, we must combat China’s theft of advanced U.S. technology and their brazen violation of U.S. law.”
The Telecommunications Denial Order Enforcement Act (H.R. 7255) would require:
• Establishing that it is U.S. policy to enforce denial orders banning the export of U.S. parts and components to Chinese telecoms 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 telecoms found to be in violation of U.S. export control laws or sanctions;
• Maintaining penalties for U.S. export control law or sanction violations for a year “until a pattern of compliance and cooperation,” proving the Chinese telecom has changed its lawbreaking policies.
• And prohibiting federal agency officials from modifying penalties imposed on Chinese telecommunications companies, their agents, or affiliates until the president certifies that the company has not violated U.S. laws for one year and is cooperating fully with U.S. investigations.
The lawmakers said their proposed legislation would ensure Congress has oversight of the White House when it comes to export control and sanctions determinations related to Chinese telecoms.