Sen. John Cornyn came away with the impression that the administration would be fine with barring ZTE from doing business with the federal government if the firm could continue to operate in the U.S. commercial market. | Jacquelyn Martin/AP Photo White House presses Republicans to soften ZTE ban

President Donald Trump challenged Republican lawmakers during a meeting Wednesday to come up with a new solution that cracks down on Chinese telecom firm ZTE while preserving Trump’s ability to negotiate with China, attendees told POLITICO.

The White House provided no specific legislative alternative, said Senate Majority Whip John Cornyn (R-Texas). But Cornyn came away with the impression that the administration would be fine with barring ZTE from doing business with the federal government if the firm could continue to operate in the U.S. commercial market.


“Obviously government procurement is much more sensitive when it comes to national security," Cornyn said.

The White House meeting marked the administration's latest effort to defuse the ongoing standoff with Congress over ZTE. The Senate on Monday overwhelmingly passed a defense policy bill that would revive a U.S. government ban on the Chinese company. That was a sharp rebuke to Trump, who has sought to keep ZTE in business as part of a broader trade negotiation with China.

The Senate bill must now be reconciled with the House version of the legislation, which would take a softer approach to Chinese telecoms like ZTE, preventing them from entering into federal government contracts but not restricting their commercial activity in the U.S. That's the approach Cornyn indicated the administration is willing to embrace.

But it's not clear if that lesser restriction will satisfy Congress. Members of both parties fear ZTE equipment could be used to spy on Americans, steal U.S. trade secrets or lay the groundwork for future cyberattacks. Within the Republican Party, the debate has produced a sharp split, pitting Trump allies like Sen. David Perdue of Georgia against national security hawks like Sen. Tom Cotton of Arkansas, who sponsored the Senate ZTE provision.

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For the Wednesday meeting, the White House summoned GOP lawmakers from both chambers who will work to reconcile the two versions of the defense bill. Cabinet officials including Commerce Secretary Wilbur Ross were also present.

Although a televised portion of the meeting delved into immigration — and the now-rescinded administration policy of separating migrant families crossing the U.S.-Mexico border — lawmakers said ZTE was also on the agenda. White House spokespeople didn't respond to requests for comment on the session.

The Commerce Department in April imposed a seven-year ban on ZTE, citing the company's illegal sales to North Korea and Iran in violation of an earlier penalty agreement. But the company soon got wrapped into Trump's international wrangling with China, and the administration announced a subsequent deal in May to allow ZTE to operate in the U.S. if it pays a $1 billion fine, changes its management and embeds a compliance team.

That reversal gave a lifeline to ZTE. The company is the fourth-largest vendor of mobile phones in the U.S. but relies on U.S. chip-makers to provide many of the electronic components. ZTE said the earlier sanctions would have forced it to shut down, and the company's stock has zigzagged amid the rapidly changing situation in Washington.

While the Senate ZTE ban attracted broad bipartisan support, a number of Republicans expressed confidence they can come up with language that can appease Trump.

“I think we’ll get something where we have agreement with Congress and the administration on how to handle the issue, and in the broader context, not just ZTE,” said Sen. John Hoeven of North Dakota, who voted for the defense bill Monday.

“We’ve already pretty much worked it out,” Perdue told POLITICO. “The House bill’s got a solution. Tom Cotton and I have worked out a solution, and we’re on the same page. So I think we’re headed toward a solution on this thing.”

A Cotton spokeswoman declined to say whether the senator is aligned with Perdue but said the White House conversation was “constructive” and he supports continued work to find a solution that balances security and privacy concerns.

Other GOP members appeared less optimistic.

Sen. Ron Johnson of Wisconsin dismissed the gathering as having produced no “definitive conclusions” on how to address ZTE. Sen. Roger Wicker of Mississippi refused to comment, citing the off-the-record nature of the meeting.

Meanwhile, Sen. Marco Rubio (R-Fla.), who was not invited to the White House gathering, blasted the idea of watering down the Senate language.

"ZTE is a systemic threat to American national security. They don’t just make cellphones; they make routers and other components of our telecommunications system," Rubio said in a Facebook video. “Now we’re going to stick their machines inside our telecommunications systems so they can spy on our researchers, so they can spy on our companies, so they can continue to steal our information? Why would we want those companies to be in business in America?"

Earlier Wednesday, Ross, the Commerce secretary, came in for some intense grilling on ZTE at a Senate Finance Committee hearing. Sen. Ron Wyden (D-Ore.) tangled with Ross on the issue and stated flatly, “I consider ZTE an espionage threat."

Sen. Cory Gardner (R-Colo.), who didn't attend Wednesday's meeting, pushed back against changing the substance of the Senate defense bill.

“There may be perhaps conversations in the White House today to change some lines, but I think we should continue to be as tough as we can on companies like ZTE and Huawei,” he told reporters.