Print Edition - 2018-06-15 | Oped
Trump’s deal with a dangerous company
- Whether there is a senate amendment to reverse his reprieve for the Chinese firm ZTE is unclear
Jun 15, 2018-
Instead of hosannas greeting President Donald Trump upon his return from Asia, a clash with Congress awaits him: Senators of both parties have just agreed to add language to the annual military spending bill that would reverse his decision to save the Chinese telecommunications company ZTE.
Trump, riding high off his meeting with the North Korean leader Kim Jong Un, is sure to fight back. He will most likely claim that he knows what he’s doing, and that internal political dissent will make him look weak at a critical moment, points that his political and media allies will surely echo.
But the Senate must hold its ground: Not only does ZTE pose a unique threat to American security, but Trump’s kid-glove treatment of the company raises questions about possible links between it and Trump family businesses.
It would be easy to mistake ZTE for just another player in Trump’s trade wars, and his decision to let do business again with American suppliers, in exchange for a $1 billion fine, as a tactical concession to China, which requested the deal. So it’s important to keep in mind why the United States put ZTE on a sanctions list in the first place: According to Attorney General Jeff Sessions and other law enforcement officials, it violated export controls that are meant to keep American technology out of the hands of dangerous regimes, like North Korea and Iran.
What’s worse, even after it was caught, ZTE resumed illegal shipments. It tried to conceal that by lying to federal investigators and its own investigators and lawyers. Moreover, the violations were, according to the Justice Department, part of an “elaborate scheme” that was approved by the company’s “the highest levels of management.”
The $1 billion payment would be a bargain for ZTE and China: The company had a market capitalization of about $20 billion before the announcement in April of sanctions against it; it would have struggled and possibly even failed if the Department of Commerce had stood by its decision to deny it American components for its cellphones and other products for seven years. Thousands of jobs would have been lost in China.
Worse still is the precedent this reprieve sets: When other regimes and state-linked businesses come to the negotiating table, they now know that they can commit flagrant violations of international sanctions, lie to American investigators and buy their way out of trouble if they are caught.
Why then was the deal offered? That’s unclear. But we do know that someone else is getting a good deal in the bargain: the Trump family.
First, the family benefits from over $500 million in investments extended by a conglomerate owned by the Chinese government in an Indonesian development project that involves the Trump Organization, revealed just days before President Trump announced his decision to bail out ZTE. The developer described the Trumps as partners in the project. Because the president retains his financial interest in the Trump Organization, this investment directly benefits him.
But that is not all. While all of this was happening, the Chinese government also approved seven new trademarks for the business of Trump’s daughter Ivanka Trump. They come on top of others extended to her and her father’s enterprises since the 2016 election. The value of these trademarks to the Trumps is hard to quantify, but it could well be many millions of dollars. Moreover, we just learned that Ivanka Trump and her husband, Jared Kushner, made $82 million last year. Because of shortcomings in the disclosure form, their exact financial dealings in China are hard to trace. But it is fair to say she has almost certainly benefited from her Chinese trademarks.
To China, $500 million here and a few trademarks there is not even a rounding error. But the possible consequences to the United States are extremely dangerous. That is why Trump’s Chinese and other foreign profiteering has been challenged in American courts. Last week, more than 200 members of the minority party in Congress sought standing in the Federal District Court in the District of Columbia for their case alleging that President Trump has violated the Constitution by accepting benefits (“emoluments”) from China and other foreign governments.
Standing has already been granted in a separate case brought by Maryland and the District of Columbia, and this week brought the latest hearing in that case, on the scope of the constitutional prohibition. A third lawsuit is on appeal in the Second Circuit Court of Appeals, in New York (one of the authors, Norman L. Eisen, is co-counsel in these two cases).
Now a bipartisan group of Senate leaders have moved to reverse the ZTE deal. The Senate provision, introduced by the Republicans Tom Cotton and Marco Rubio and the Democrats Chris Van Hollen and Chuck Schumer, would put ZTE back on the sanctions list.
These senators, and their supporters, sound committed to their position, and it is unlikely the Democrats will back down. But now that Trump has returned to Washington, he is surely going to demand that the Senate drop it, whether because he’s “winning” on foreign policy and knows best what he’s doing with China, or on some other justification.
The Senate must hold firm and Congress must pass this amendment. Otherwise, it will not be long before we face a series of future transactions posing similar threats to our national security — and similar benefits to the Trumps.
—©2018 The New York Times
Published: 15-06-2018 07:36