Chap 15: Taking Back Trump's America Serialization

A Wilbur Ross ZTE Belly Flop

Wilbur Ross has largely been sidelined in high-stakes trade negotiations with China in the latest signal that President Donald Trump is losing confidence in his commerce secretary.... Ross — whom Trump once affectionately called a “killer,” a high compliment in the president’s lexicon — has steadily become a bit player, with the president regularly leaning on Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer and White House trade adviser Peter Navarro.

The commerce secretary’s standing took another hit this week when the president tweeted criticism of the department’s recent decision to block the Chinese phone-maker ZTE from accessing U.S. technology..... “He’s not a prime-time player here,” said one trade strategist closely tracking the administration’s trade discussions.

Politico, May 14, 2018¹¹⁵

ZTE – formally the Zhongxing Telecommunications Equipment Corporation – is a poster child of a state-directed Chinese company that, as a matter of Chinese Communist Party strategy, uses stolen intellectual property from America and other Western countries to gain a competitive advantage. On behalf of the Chinese state, ZTE then uses that purloined advantage to kill American companies and steal American jobs.

ZTE is also a company that has made sure – while making billions of dollars along the way – that rogue regimes like Iran and North Korea have all of the technological baddies they need to build up their nuclear weapons arsenals – and thereby keep a poisonous potpourri of profane mullahs and blood-sucking dictators comfortably in power.

The ZTE tale itself starts very early in the administration. Under the gun of the Department of Commerce, ZTE was forced, in March of 2017, to pay a combined civil and criminal penalty and forfeiture of just over $1 billion. Not exactly small change.

ZTE had been found guilty of illegally shipping its telecom equipment to both Iran and North Korea. As the Financial Times succinctly put it:

The Chinese state-owned group was found to have conspired to evade the embargoes by buying US components, incorporating them into ZTE equipment and shipping them to Iran and North Korea. As part of its original settlement with the US, ZTE agreed to a 7-year suspended denial of export privileges, which could be triggered if the company failed to comply with the terms of the deal.¹¹⁶

Throw in further the facts that ZTE executives had also made false statements and obstructed justice so as to “affirmatively” mislead the American government, and it had been time back in 2017 for the Department of Commerce to throw at least half a book at them.¹¹⁷ Ergo, the more than $1 billion fine. So far, so good.

Fast-forward now to 2018 and, lo and behold, Commerce Secretary Wilbur Ross discovers that ZTE had violated its 2017 agreement with yet more false statements and by disregarding much of what it had agreed to in the original settlement. So Wilbur decides to go yard on ZTE– and here’s an important detail: Wilbur throws what he thinks is a touchdown pass without informing the Boss.

The next thing we know at the White House on April 16^th, 2018 is that Wilbur has slapped a so- called “denial of export privileges” penalty on ZTE. This was effectively a death sentence for the company because the denial would prohibit ZTE from sourcing US components that it needed to build its phones and other products.¹¹⁸ With such a death sentence, at least from afar, Wilbur’s opening move on ZTE looked far more like a beautiful Greg Louganis dive than the bellyflop it would soon turn out to be.