TechTheDay

The decision to ban US companies from trading with ZTE for seven years is shocking. Being able to control a company’s actions from another country is a terrifying power to hold. Just imagine: you can effectively cripple another country’s economy just by ordering the companies under your administration to stop trading with the “enemy” country or company, or any country or company that trades with the “enemy.” And if the product or material your country’s companies provide is the best in the world, and is depended on by many other companies around the world, you are basically the king of the world.

This is an immoral power, one that violates the concept of free market, free exchange of ideas and the sovereignty of another country. A monopoly like this is dangerous. It’s not illegal: Qualcomm and Google are under the USA’s jurisdiction, and following USA’s ban on trading with ZTE is a duty of these companies after all, but it is immoral because they are basically depriving ZTE of the necessary materials, software, and equipment that it needs to continue to operate, just for trading with Iran in a legal way. If the USA has problems with Iran, shouldn’t the US directly address the issue with Iran and Iran only? Getting other parties involved is simply the actions of a schoolyard bully, shaming his target and encourages or orders others to abuse the target too. And if the others don’t follow the bully’s orders they themselves get bullied.

The Best Course of Action is Not The Best

And so we stand here as ZTE is bullied to the point of being crippled by the US. ZTE may be the 4th largest telecom company in the world and the biggest in China, but being deprived of important technology and materials from Qualcomm and Google can ultimately crush ZTE. You may say that ZTE can just purchase other parts from other countries or companies, say Qualcomm’s processors, for example, but since they are the best in the world, you can’t find anything else better. The possible alternative is AMD or Intel, but both are also US companies and are subject to the ban. So ZTE should use China’s local semiconductor companies’ processors, sure if you want your phones to be second best. How long will it take for China’s to be able to catch up? Would South Korea, Japan, or even Europe allow their companies to trade with ZTE when they’re allies with the US? But what if their products are 10% made up of materials from the USA too? Any item that is 10% made up of material that comes from the US is subject to US laws. ZTE will have to find non-US suppliers whose products are not made with any material that come from the US.

Power And Privilege

It is clear that the USA enjoys too much power and privilege when it exerts its will to the international community. Some points to the dominant role of the US dollar to the world market are the reason for this. As long as the USA is in complete control it can put pressure on other countries, like Russia or Iran, and companies under those countries’ jurisdictions cannot hope to compete in the world market. And the USA can even make up any reason not to trade with a target country or company.

This is why it isn’t wise to depend on another country’s exports. You are basically setting yourself up to be controlled by a foreign power. ZTE depending on 30% of its materials, equipment and software on US companies is so dangerous that this ban might be lethal to ZTE. It might be wise for ZTE to invest in local suppliers from now on.