China's ZTE Finally Responds to US Ban, Says It Had Self-Reported the Violations

A week after the US Department of Commerce banned sales by American companies to ZTE for seven years, the Chinese technology company finally issued a statement on April 20 that pledged to "resolve the issue through communication," and "take judicial measures" if necessary.

Later that day, a senior US Commerce Department official told the Wall Street Journal that the agency had granted ZTE's request to present additional evidence on the case, even though the company does not have the right to make an appeal under the department's regulations. The agency has "exercised discretion" to allow ZTE go throuhg an "informal process," a senior official told the Reuters news agency.

Self-reported violations

In its statement, ZTE asserted that the violations cited by the Commerce Department's Bureau of Industry and Security (BIS) were self-reported by the company, which also made "corrective measures" and hired a US law firm to conduct an independent investigation. "It is unacceptable that BIS insists on unfairly imposing the most most severe penalty on ZTE even before the completion of the investigation of facts," ZTE complained. Among the measures taken was the replacement of ZTE's compliance and legal officer. 

In March, ZTE agreed to pay a US$1.2 billion fine over its exports to Iran and North Korea, which are under global sanction, in exchange for the US suspending a ban on US technology sales to it. But the BIS activated the order on April 16, accusing ZTE of granting bonuses to employees involved in the illegal exports and failing to issue them letters of reprimand.

'Judicial action'  

"ZTE will not give up its efforts to resolve the issue through communication, and we are also determined, if necessary, to take judicial measures to protect the legal rights and interests of our Company, our employees and our shareholders, and to fulfill obligations and take responsibilities to our global customers, end-users, partners and suppliers," said ZTE. "As a global company originating in China, ZTE will unite all of its employees as one with full confidence to work together taking best efforts to facilitate a final resolution."

How or whether the dispute will be resolved to ZTE's satisfaction is unclear, but China's Ministry of Commerce has said it strongly supports the company. The world's two largest economies recently figured in an escalating trade war over aluminum, steel, sorghum and other goods. US Trade Secretary Steven Mnuchin has now floated the idea of a trip to China, and resolving the ZTE issue may figure in the discussions as well.