US Commerce Secretary Wilbur Ross to assess espionage threat of ZTE at urging of senator

Ross promised Senator Ron Wyden a response ‘as promptly as possible’ while noting security issues were not his department’s area of concern

PUBLISHED : Thursday, 21 June, 2018, 3:34am
UPDATED : Thursday, 21 June, 2018, 4:46am

Commerce Secretary Wilbur Ross has been urged by a US senator to address whether his department believes that Chinese telecoms giant ZTE poses an espionage threat to the United States.

Senator Ron Wyden, Democrat of Oregon, posed the question at a Senate Finance Committee hearing on Wednesday concerning the recent deal by the Trump administration that saved ZTE from the brink of collapse and requested a written answer within a week from the commerce department to clarify its position on national security concerns.

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Wyden said that keeping ZTE alive – as the administration had done when President Donald Trump ordered an end to a seven-year ban on US suppliers selling their components to ZTE – was in conflict with what William Evanina, the director of the National Counterintelligence and Security Centre, said in testimony in May, when he declared that ZTE had been an espionage threat for years.

Ross agreed to provide a response “as promptly as possible”, while noting that his department had dealt with the issue of ZTE “in our domain, which is not espionage.” He said the department’s concern was “simply violation of export controls.”

Ross said that the US$1.4 billion in penalties for ZTE that his department came up with after Trump sought to set aside the seven-year ban was in its own way rigorous. “I think if it was our original decision, everybody would have applauded it,” he added.

The focus on ZTE, at a hearing to discuss Trump’s recent trade tariffs on China, highlights how entangled ZTE has become in the developing trade war between the two countries.

ZTE pays US$1 billion fine as US lawmakers pass amendment to reinstate ban

It also shows that national security has become increasingly central to US’s business dealings with China.

The ban on US suppliers selling to ZTE came in April, an outgrowth of the company’s violating US trade laws by doing business with North Korea and Iran and resulted in ZTE’s shuttering its operations within weeks.

After Trump asked the commerce department to come up with an alternative penalty, it struck a deal earlier this month to lift the ban after ZTE agreed to pay a fine US$1 billion, place US$400 million in escrow in case of future breaches, replace management and accept US compliance officers.

Since then, US lawmakers have stepped up efforts to thwart the deal, and earlier this week the Senate passed an amendment in a defence bill that would reinstate the ban.

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That amendment still needs to be reconciled with the House of Representatives, which approved a defence bill without the amendment, but it also must win the president’s support to go into effect.

On Wednesday, Trump met with Republican senators and representatives to urge them to amend the wording and allow ZTE to remain open, arguing that it was a useful chip in negotiations with China on both trade and North Korean denuclearisation.

Senators leaving the meeting said there had been substantial progress, but that no agreement had yet been made.

In the meantime, ZTE has tried to follow through with the deal the president approved, paying the US$1 billion in fines and arranging an account for the US$400 million while racing to resume shipments from US suppliers of the components that are crucial for its products.