Massive U.S. defense policy bill passes without strict China measures

[August 02, 2018]    By Patricia Zengerle
 
 WASHINGTON (Reuters) - The U.S. Senate passed a $716 billion defense policy bill on Wednesday, backing President Donald Trump's call for a bigger, stronger military and sidestepping a potential battle with the White House over technology from major Chinese firms.

U.S. Army soldiers carry a large U.S. flag as they march in the Veterans Day parade on 5th Avenue in New York November 11, 2014. REUTERS/Mike Segar

The Senate voted 87-10 for the John S. McCain National Defense Authorization Act, or NDAA. The annual act authorizes U.S. military spending but is used as a vehicle for a broad range of policy matters as it has passed annually for more than 50 years.

Since it cleared the House of Representatives last week, the bill now goes to Trump, who is expected to sign it into law.

While the measure puts controls on U.S. government contracts with China's ZTE Corp <000063.SZ> and Huawei Technologies Co Ltd [HWT.UL] because of national security concerns, the restrictions are weaker than in earlier versions of the bill.

This angered some lawmakers, who wanted to reinstate tough sanctions on ZTE to punish the company for illegally shipping products to Iran and North Korea.

In another action largely targeting China, the NDAA strengthens the Committee on Foreign Investment in the United States (CFIUS), which reviews proposed foreign investments to weigh whether they threaten national security.

Lawmakers from both parties have been at odds with the Republican Trump over his decision to lift his earlier ban on U.S. companies selling to ZTE, allowing China's second-largest telecommunications equipment maker to resume business.

But with his fellow Republicans controlling both the Senate and House, provisions of the NDAA intended to strike back at Beijing and opposed by the White House were softened before Congress' final votes on the bill.

Separately, the NDAA authorizes spending $7.6 billion for 77 F-35 Joint Strike Fighter jets, made by Lockheed Martin Corp <LMT.N>.

And it would prohibit delivery of the advanced aircraft to fellow NATO member Turkey at least until after the production of report, another measure that was stricter in earlier versions of the bill.

U.S. officials have warned Ankara that a Russian missile defense system Turkey plans to buy cannot be integrated into the NATO air and missile defense system. They are also unhappy about Turkey's detention of an American pastor.

The fiscal 2019 NDAA was named to honor McCain, the Armed Services Committee chairman, war hero, long-time senator and former Republican presidential nominee, who has been undergoing treatment for brain cancer.

(Reporting by Patricia Zengerle, additional reporting by Roberta Rampton; Editing by James Dalgleish and David Gregorio)

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