Commerce Secretary Ross: Progress being made on ZTE alternatives

U.S. Department of Commerce Secretary Wilbur Ross said on CNBC’s “Squawk Box” today that progress was being made in developing alternative sanctions on ZTE. Such sanctions might involve the placement of U.S. compliance officers within ZTE who would monitor the company’s activities.

U.S. Department of Commerce Secretary Wilbur Ross said on CNBC’s “Squawk Box” today that progress was being made in developing alternative sanctions on ZTE. Such sanctions might involve the placement of U.S. compliance officers within ZTE who would monitor the company’s activities.

President Donald Trump requested last week, within the context of trade negotiations with China, that the department investigate alternatives to the current sanctions, which bar ZTE’s access to U.S. technology for seven years (see “Trump tweets support of lifting ZTE ban”). ZTE has ceased major operations in the wake of the ban.

“We’re developing a matrix of things,” said Secretary Ross. “And while we haven’t come quite to a final decision yet, we think there may very well be an alternative that will be quite punitive to them, but really modify behavior. And that’s what we’re after.”

Secretary Ross added that he is considering a demand that U.S. compliance officers be placed within ZTE to monitor the company’s compliance activities as part of any change in sanctions.

Earlier in the interview, Secretary Ross revealed that he went against the advice of his staff in issuing the Denial Order that bars ZTE from access to U.S. technology. The original sanctions, put into place in March 2017, gave the department two options if ZTE were found to be in violation of that sanctions agreement: collection of approximately $300 million in fines that were initially suspended or issuance of the ban. Secretary Ross told CNBC that his staff had recommended the monetary option. “But I really wanted to make sure we would change the behavior of this company. Because they had been bad actors,” he said.

The punitive nature of the current sanctions is significant, according to a report May 22 from Bloomberg. The news outlet says its sources indicate that ZTE has lost at least $3.1 billion so far as a result of the Denial Order.

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