ZTE Complains That Congress' Blanket Bans Should Also Cover Western Devices Made in China
October 9, 2012 11:45 AM
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ZTE claims transparency, yet an FBI investigation revealed it was funneling U.S. parts to iran
In a tersely worded response, ZTE Corp. (
) lashed out at a U.S. House of Representatives'
called for a ban
on the Chinese electronics firm's telecommunications equipment and smartphones.
I. ZTE Asks Congress to Target Apple, et al. Too
David Dai Shu, ZTE’s director of global public affairs, comments, "It is noteworthy that, after a year-long investigation, the Committee rests its conclusions on a finding that ZTE may not be ‘free of state influence.’ This finding would apply to any company operating in China. The Committee has not challenged ZTE’s fitness to serve the US market based on any pattern of unethical or illegal behavior."
ZTE describes itself as "China’s most transparent, independent, globally focused, publicly traded telecom company", arguing it "set an unprecedented standard for cooperation by any Chinese company with a US congressional inquiry."
Mr. Dai Shu adds, "ZTE recognizes and fully respects the Committee’s obligation to protect US national security. ZTE believes the Committee focused its examination too narrowly on vendor locations not on equipment security. The Committee omitted the Western vendors and their Chinese manufacturing partners, which provide most of the US equipment now in use. The Committee also overlooked the opportunity to advance universal application of the Trusted Delivery Model which protects critical telecom networks on a vendor-neutral basis."
ZTE points out that the iPhone and other "U.S." devices are also made in China, and, in theory, equally at risk. It says if its products should be banned, so should Apple,
He argues, "Particularly given the severity of the Committee’s recommendations, ZTE recommends that the Committee’s investigation be extended to include every company making equipment in China, including the Western vendors. That is the only way to truly protect US equipment and US national security. National security experts agree that a Trusted Delivery Model will strengthen national security. In fact, major US carriers are increasingly requiring Trusted Delivery Model in their contracts."
Indeed, it does seem a bit odd in the grand scheme of things that ZTE and Huawei Technologies Comp. (
) were scrutinized so closely and are facing sales bans, while other companies like Apple, Inc. (
) -- who
contract their device manufacturing to Chinese electronics manufacturers
-- received no scrutiny.
ZTE does make a compelling argument. If the panel is arguing that large Chinese manufacturers can be coerced by the Chinese government to including hidden spying features in their products, why couldn't Foxconn -- Hon Hai Precision Industry Co Ltd.'s (
) massive Chinese manufacturing subsidiary -- put the same kind of spying features inside iPhones or other U.S.-designed smartphones.
II. ZTE's Iran Secrets
However, ZTE may not be quite as transparent as it says. The company is in a difficult spot as it insists on doing business both with the U.S. and Iran. But U.S. trade laws tightly regulate what U.S. made products can be sent to nations viewed as hostile -- and that includes Iran.
U.S. Federal Bureau of Investigations
conducting a criminal probe
into whether ZTE sold U.S.-made Cisco Systems, Inc. (
) telecommunications equipment to Iran.
that a July 2011 ZTE parts list clearly lists several Cisco switches as being transferred to Telecommunication Co of Iran (TCI) -- a criminal violation of U.S. trade laws.
The probe is still shaking down, and it may lead to charges for some of ZTE's U.S. employees. In the wake of the Iran incident, Cisco cut ties with ZTE.
ZTE is accused of funneling electronics to Iran. [Image Source: Reuters]
The Iran controversy adds a tricky wrinkle to the ZTE debate. ZTE certainly does seem to have behaved less-than-honestly, according to reports, trying to obfuscate the fact that it was funneling (intentionally or unintentionally) small quantities of U.S. telecommunications components to Iran.
On the one hand, the Iran controversy and the question of Chinese spying are two separate issues. On the other hand, the Iran controversy could be indicative of general opportunism and dishonesty at ZTE, which could lead to the kind of spying Congress is concerned about. As former U.S. President George W. Bush
, "There's an old saying in Tennessee — I know it's in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can't get fooled again."
ZTE on BusinessWire
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10/9/2012 1:45:39 PM
This just shows how disconnected from reality law makers are. If they were worried about this, they should have done something about it 30 years ago! It's too late. EVERYTHING is made there. Every computer and every cell phone in every government office. Blocking a Chinese brand but letting everyone else make their stuff there and sell it here is a thinly veiled attempt at preventing foreign compeition here and nothing more. It's a lie.
This is just like Obama blocking a family-owned wind farm sale to a Chinese company because it's too close to a top secret base. Hmmm... Your base is some super top secret and critical to national security and yet you don't bother claiming enough land around it to make it secure from the outside? And who is to say that American family that owns the farm aren't terrorists spying on the base? It's no security at all if you're going to say we trust Americans simply because they're citizens. It's not about security. It never was. It's purely political and I'm sick of seeing these people get away with their lies.
RE: No brainer
10/9/2012 9:38:58 PM
Blocking that windfarm was pure, 100% election season politics. They weren't blocking it on the grounds of it interfering with radar or radio, say, but ownership. Easy enough to verify wind turbines are in fact turbines and not stuffed full of spy gear. The Chinese owner probably just wanted to cash in on some green-energy subsidies, same as anyone else.
But nope, we're a month from an election, and Obama needed a little plug in the weekly news cycle that sounded tough on China. There ya go. America loses a windfarm and sullies our international image to investors, Obama gets maybe 10 extra votes, max. Hooray, politics.
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