The President and ZTE

Oakley Standard Issue


The press corps is up in arms about the President and China trade relations, particularly ZTE (a China telecom company). ZTE has been called a security threat for the company’s ties with the government, and possible malware embedded in its phones and communications equipment.  As the company has major US contracts ZTE is looking at possible bankruptcy; President Trump announced via Twitter that the Commerce department will work with ZTE to save jobs and avoid collapse.   Both Republicans and Democrats are making statements against this.  Remember, when President Trump announced a Trade Action against China last month his stated goal was to achieve “Fair and Reciprocal trade agreements.”  Fair and Reciprocal – that goes both ways.  So if a company in China feels the effects of a Trade Action it would be in our best interest to work out an agreement that is mutually beneficial. The President of the United States said this from the beginning.

Remember that Republicans and Democrats were against the US Trade Actions against China to begin with; they said a $50 billion dollar sanction against Chinese companies would lead to a “trade war.”  I felt assured that a trade war could and would be avoided by the President’s own words: that he seeking fair commerce deals. What changed?

Nothing, really. “Fair” does not mean “only beneficial to the United States.” (And certainly many of our past trade deals have been heavily weighted in favor of other countries.) But suddenly it seems everyone is a fair trade expert, and an isolationist. Democrats are signalling that they are simply against anything President Trump does, be it open up trade, restrict trade, imposing sanctions, or not imposing sanctions.

“The toughest thing we could do, the thing that will move China the most, is [take] tough action against actors like ZTE,” Chuck Schumer (D-NY) said. “But before [US policy is] even implemented, the president backs off.”  And, Ohio Democrat Tim Ryan added, “Your willingness to throw a lifeline to ZTE and China puts our national security at risk. What happened to America First?”

Well America is still first, there is nothing noteworthy to report at this time that it isn’t. Second, I don’t recall any Democratic support for the US Trade Action to begin with – they were screaming about starting a trade war with our biggest trading partner.  So the only thing that has changed is the mind’s of Democrats; but not so much of a change as to come up with an original thought.   Just sound bytes and slogans.  Words are cheap, Democrats.

Huawei is the planet’s third largest smartphone manufacturer, and ZTE  uses its parts and components. Both companies were flagged for posing a national security threat back in 2012.  But the phones were still for sale in the United States – from Amazon and Best Buy, among others – yet no one was told about the security risk to the American public? Thanks, Obama.

But just recently the Congressional Intelligence Committee heard testimony from US officials that they consider using the phones and telecommunications components a security risk, and the Pentagon announced that they would no longer sell Huawei and ZTE phones on their bases.  This just happened, so I find it beyond belief that these politicians and media pundits are now crying foul over President Trump trying to salvage a deal with these two companies.

I, for one, have always mistrusted any telecommunications products made in China and have always assumed they are full of spyware. Either that or the technology was stolen from the US.  No one else batted an eye. And consider, while the Obama government may have had trepidation about spyware in ZTE and Huawei phones, they continued to allow all other US companies have their phones manufactured in China anyways. What’s the difference?  There is little difference between buying two phones when both phones are made and manufactured in China.

Marco’s tweet seems to come a little late in the game. (Unless, of course, he just read my article on longstanding IP Theft in China.)  The time to do something about Huawei, ZTE, and China in general has long passed. The phones are still available for sale at many US outlets; some US companies are discontinuing their sale, but what about phone sales up to this point? Will consumers throw them out and stop using them? Trade them in for another phone….that’s made in China?  Of course not. Because the US government never made an official announcement or issued any warning whatsoever about the products until now – way past when the barn door was already opened wide.  So I feel that while the scrutiny is warranted, it is still much ado about nothing, because nothing had been done under previous administrations to warn us or curtail the manufacture and sale of these phones until now.  Rubio seemed content to have these phones loose in the US consumer and business markets before this weekend.

And no – the media can’t spin this as Donald Trump going back on a campaign promise to protect American jobs. Huawei and ZTE were not employing any US workers at their factories, and Americans were not making their phones. This is a red-herring intended to confuse and obfuscate. American manufacturing jobs (which have long been off-shored decades ago) would not be effected either way in this ZTE debate. There is simply nothing to compare.
Far be it for the media to evoke a sense of fairness, so allow me. A fair comparison would be if AT&T was closing a manufacturing plant but the US was trying to salvage ZTE jobs instead – Oh wait, what’s that? AT&T doesn’t have any US manufacturing plants? My point is made.

Creightons

About the Author

William Cunningham is an Intellectual Property and Financial Services professional. He had a 15 year career at Thomson Reuters in the IP, Trademark and Copyright division, as well as the Global Financial Markets and Risk business unit. He lives in Massachusetts with his dog Winston-Montgomery.

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