The US is looking to punish and tighten control over the Chinese telecommunications company before allowing it back into business
The Trump administration may soon claim as much as US$1.7 billion in penalties from ZTE Corp, as it looks to punish and tighten control over the Chinese telecommunications company before allowing it back into business, according to people familiar with the matter.
The US Commerce Department is also seeking unfettered site visits to verify that American components are being used as claimed by ZTE, and wants it to post calculations of the US components in its products on a website, the people said.
China’s No. 2 telecommunications equipment maker has been crippled by a ban imposed in April on buying US components for seven years for breaking an agreement reached after it was caught illegally shipping goods to Iran and North Korea.
The negotiations with ZTE come as US Commerce Secretary Wilbur Ross heads to Beijing this weekend for trade talks. One source said Washington also wants ZTE to replace its board and executive team in as soon as 30 days, but a deal still has not been finalised, and the sources cautioned that the penalties were fluid and the terms could change.
Representatives from the Commerce Department and ZTE did not immediately respond to a request for comment.
American companies provide an estimated 25 to 30 per cent of components in ZTE’s equipment, which includes smartphones and gear to build telecommunications networks.
The company’s status has become an important bargaining chip in high-level trade talks between China and Washington amid reports that if the US eases up on ZTE, China will buy more American agricultural goods.
