But following lobby efforts from Chinese President Xi Jinping, US President Donald Trump intervened and asked the Department of Commerce to reconsider the ban and work out a deal that would "save Chinese jobs" and allow ZTE to continue. The Trump administration announced a deal with ZTE earlier this month, but Senate leaders have sought to reverse it by tucking a provision into the must-pass defense package.
In addition to reversing the U.S. reversal on ZTE, the bill also calls for bans on government procurement of surveillance and telecom equipment made by five Chinese companies.
ZTE's plight began in April when the US Department of Commerce imposed a seven-year ban on American companies doing business with the Chinese phonemaker after it exported telecoms equipment to Iran and North Korea.
Tennessee Senator Bob Corker said the president signaled that he will not veto the defense bill if senators block the agreement. After the Senate vote on the defense bill closed, with the bill passing 85-10, four of the senators who had put forward the amendment released a statement.
"ZTE has violated US sanctions, lied about it, but even more importantly, its technology has been deemed a national security threat by the FCC, the Federal Bureau of Investigation and the Pentagon", Schumer said.
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"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", said a group of United States senators from both parties in a joint statement.
The House of Representatives passed its own version of the measure, and the two chambers must now hash out a compromise. The company has lost around 60 percent of its value since it resumed trading last week after a two-month suspension that followed the initial ban.
"We've articulated our desire to better educate members about the ZTE action by Commerce, and we expect to address it in conference", White House legislative liaison Marc Short said last week."We think we can fix it in conference", Short added, referring to the process when differences in House and Senate bills are reconciled.
"This is the first time Congress has really stood up to (Trump) on a trade issue, and it's clear they are angry", Bill Reinsch, a senior adviser at the Center for Strategic and International Studies in Washington, told Bloomberg News.
ZTE, which employs 80,000 people, said recently that its major operations had "ceased" after the ban, raising the possibility of its collapse.