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House Appropriations Bill Seeks to “Block Bailout” of ZTE in a Further Effort by Congress to Codify Sanctions 

President Trump’s surprise weekend tweet announcing that he was working with China’s President Xi Jinping to “give massive Chinese phone company, ZTE, a way to get back into business, fast” continues to roil members of Congress and others who want to uphold the Commerce Department’s export ban on the company. After a week of Congress members’ criticism and surprise, the House Appropriations Committee has taken concrete action to constrain the President’s ability to alter Commerce’s enforcement action against ZTE.

On May 17, the House Appropriations Committee unanimously approved a measure to block the Commerce Department from using appropriated funds to alter the export ban (i.e., the “denial order”) that the agency activated against ZTE on April 15, 2018.

The ZTE measure was approved as an amendment to the fiscal year 2019 bill funding the Departments of Commerce and Justice, Science, and Related Agencies (“Commerce Appropriations Bill”), which was approved by the Appropriations Committee on May 17. The Amendment, which was introduced by Rep. Ruppersberger (D-MD), reads as follows:

None of the funds made available by 2 this Act may be used in contravention of the ‘‘Order Activating Suspended Denial Order Relating to Zhongxing  Telecommunications Equipment Corporation and ZTE Kangxun Telecommunications Ltd.’’ (83 Fed. Reg. 6 17644) published on April 23, 2018, by the Bureau of Industry and Security.

The funding bill is expected to go before the full House in June. Thus, even if passed, the Ruppersberger Amendment would not entirely block the Trump Administration’s ability to modify the ZTE denial order—for example, funds appropriated to Commerce previously could be used in support of changes and the Administration could take steps to alter the ZTE denial order prior to the enactment of the funding bill.

Congressional Codification of Sanctions Measures: CAASTA, ZTE

Beyond the ZTE case, the Ruppersberger Amendment is notable as it seeks codify, to an extent, a sanctions enforcement measure undertaken by the Executive Branch. The move is similar to Congress’ codification, by the Countering America’s Adversaries Through Sanctions Act (CAASTA), of certain of President Obama’s Executive orders imposing sanctions on Russia. CAASTA’s codification of specific Russia sanctions measures imposed by President Obama was understood to have been intended to compel President Trump to continue to impose those sanctions.

Presidential Objection to Sanctions Codification

In his CAASTA signing statement, President Trump explained that he was signing CAASTA in the interest of “national unity” while pointing out that CAASTA may have unconstitutionally encroached on his Executive authority to conduct foreign affairs. The signing statement read in pertinent part:

Still, the bill remains seriously flawed – particularly because it encroaches on the executive branch’s authority to negotiate.  Congress could not even negotiate a healthcare bill after seven years of talking.  By limiting the Executive’s flexibility, this bill makes it harder for the United States to strike good deals for the American people, and will drive China, Russia, and North Korea much closer together.  The Framers of our Constitution put foreign affairs in the hands of the President.  This bill will prove the wisdom of that choice.

The President’s CAASTA signing statement raises the question of whether the President, if the Commerce Appropriations Bill reaches his desk, will refuse to sign the bill. Or, perhaps, the White House (if it remains committed to a ZTE modification) will attempt to negotiate away the Ruppersberger Amendment before the bill goes to a vote before the House. Or, as suggested above, the Trump Administration might take steps to modify the ZTE denial order prior to the Commerce Appropriations Bill’s passage, or pursue other work-arounds. (If it were not unconstitutional, a line-item veto, the return of which the President and the Treasury Secretary recently advocated for, would be useful to strike the Ruppersberger Amendment or other measures that the Trump Administration may disfavor.)

Congress’ Sanctions Actions Are Watch Worthy

The path of the Ruppersberger Amendment and any other concrete Congressional actions on ZTE will be worth following, as is, more broadly, Congress’ assertion of legislative authority to constrain Executive Branch action on sanctions relating to particular countries (e.g., Russia) and, now, companies.

 

Post Author: MassPoint PLLC

MassPoint PLLC is a boutique law and strategy firm that works with diverse clients to meet legal, strategy, and risk management needs in a globalized, complex world.