Log In | Subscribe | | |

PoTUS interferes in US Sanctions regime

Editorial Staff

Sanctions have long been a political tool for the USA and they work in many different ways. Chinese telecoms giant ZTE has found itself almost a proxy in the USA's battle with Iran but there are other complexities, too. The result is that President Trump is finding that politics has far more nuance than he thought. The place where he's chosen to try to remove nuance is sanctions. Anyone who still thinks that Trump can't throw out rule-books that have been used for years is flying in the face of the evidence. It would be unwise to bet against him getting the result he wants this time.

The history is simple: many chips and other components in Chinese-made products have, historically, come from companies operating in the US or owned by US interests. ZTE used such components in equipment that it then sold to Iran and North Korea.

In March 2017, The two primary companies making up the ZTE combine, Zhongxing Telecommunications Equipment Corporation and ZTE Kangxun Telecommunications Ltd, agreed with the The Bureau of Industry and Security (BIS - a leading sanctions authority) US Department of Commerce to pay a civil penalty and forfeit to the US government profits on relevant deals totalling USD1,190 million - and to comply with a range of requirements. That was on allegations of breaching US sanctions, making false statements and obstructing justice by failing to provide evidence when required to do so.

That was all fine but also in the deal was a kind of suspended sentence (Americans call it probation, but that's not accurate): provided that ZTW complied with all the terms of the deal there would be no further action but if ZTE did not comply, then ZTE agreed that the Department of Commerce could "activate" a ban, lasting seven years, on supplies, by US persons and those they control, of components to ZTE. It's called a "denial of export privileges order."

On 16th April this year, the US Department of Commerce announced that it had activated the Order. Secretary of Commerce Wilbur Ross said that the breaches were "egregious." Sadly, if ZTE's alleged conduct is "egregious," one can only suppose that Ross has never seen anything truly awful. But, if the allegations are correct (and one has to accept them at face value) they would, in other circumstances, amount to at least contempt of court and possibly perjury.

Publication: