China asks for fair, just treatment of Chinese firms after US denies...

China asks for fair, just treatment of Chinese firms after US denies ZTE export privileges

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The ZTE Tower in Shenzhen, China

China’s Ministry of Commerce on April 17 urged the United States to create a fair, just, and stable legal and policy environment for Chinese companies.

This came hours after the U.S. Department of Commerce announced activation of denial of export privileges against Chinese telecom equipment maker ZTE Corp., according to Xinhua News.

On April 16, U.S. Secretary of Commerce Wilbur L. Ross, Jr. announced that the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has imposed a denial of export privileges against ZTE for “repeated false statements to the U.S. Government.”

“In March 2017, ZTE agreed to a combined civil and criminal penalty and forfeiture of $1.19 billion after illegally shipping telecommunications equipment to Iran and North Korea, making false statements, and obstructing justice including through preventing disclosure to and affirmatively misleading the U.S. Government,” Ross said in a written statement on the U.S. Department of Commerce website.

In addition to these monetary penalties, ZTE also agreed to a seven-year suspended denial of export privileges, which could be activated if any aspect of the agreement was not met and/or if the company committed additional violations of the Export Administration Regulations (EAR).

The Department of Commerce said it has now determined that “ZTE made false statements to BIS in 2016, during settlement negotiations, and 2017, during the probationary period, related to senior employee disciplinary actions the company said it was taking or had already taken.”

ZTE’s false statements were reported to the U.S. government only after BIS requested information and documentation showing that employee discipline had occurred, Ross said.

“ZTE made false statements to the U.S. Government when they were originally caught and put on the Entity List, made false statements during the reprieve it was given, and made false statements again during its probation,” said Ross.

These false statements covered up the fact that ZTE paid full bonuses to employees that had engaged in illegal conduct, and failed to issue letters of reprimand.

“ZTE misled the Department of Commerce. Instead of reprimanding ZTE staff and senior management, ZTE rewarded them. This egregious behavior cannot be ignored,” Ross said.

Denial orders are issued by the Assistant Secretary for Export Enforcement of the BIS, denying the export privileges of a company or individual. A denial of export privileges prohibits a person from participating in any way in any transaction subject to the EAR.

Furthermore, it is unlawful for other businesses and individuals to participate in any way in an export transaction subject to the EAR with a denied person.

Meanwhile, ZTE said in a statement on April 17 that it is aware of the denial order activated by Commerce.

“At present, the company is assessing the full range of potential implications that this event has on the company and is communicating with relevant parties proactively in order to respond accordingly,” ZTE said.

Photo: Brücke-Osteuropa

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