Republicans and Democrats expressed national security concerns about ZTE after it broke an agreement to discipline executives who had admitted to a conspiracy to evade USA sanctions by selling sensitive equipment to Iran and North Korea.
It looked like there may be a resolution a few weeks ago, as Donald Trump revealed that he was working with China's president Xi Jinping to revoke the ban. The legislation, which is considered crucial for continuing defense funding, was passed with 85-10 votes, one of a handful of times the Republican-controlled Senate has deviated from a Trump policy.
The reworked Department of Commerce sanction lifted the USA sales ban against ZTE, imposed a fine of $1 billion on the Chinese vendor, and dictated that a United States compliance team be embedded at ZTE for the next 10 years to make sure the company remains compliant with U.S. legislation.
Once the bill leaves committee, President Trump must either sign it into law or veto it.
The new policy would keep financial penalties on ZTE for violating USA sanctions in 2017, and would ban government agencies from buying their products.
Earlier this month, a group of US senators (including both Democrats and Republicans) announced an amendment to the National Defense Authorization Act, which would definitively block ZTE from importing USA technology.
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Senators are looking to add provisions to the defense bill to reinstate sanctions placed on the Chinese firm.
The US House of Representatives has already passed its own defence spending bill, which does not include anything about the trade ban. "Too many jobs in China lost", Trump tweeted.
"We're heartened that both parties made it clear that protecting American jobs and national security must come first when making deals with countries like China, which has a history of having little regard for either", a bipartisan group of senators said.
Lawmakers in Washington voted to reinstate the ban that prevents the technology giant from buying USA components and software after breaking an agreement for violating sanctions on Iran and North Korea.
Trump plans to host Republican members of Congress Wednesday to discuss a path forward on ZTE and other issues.
ZTE, which had to shut down major operations after the US banned it from buying American parts, has also agreed to employ a special compliance coordinator and a team of assistants at its expense for a period of 10 years, according to a detailed settlement agreement on the US Commerce Department's website.