Federal officials are reportedly outlining a path that would restore ZTE’s access to the U.S. export market — including a penalty of up to $1.7 billion.
Reuters, citing people familiar with the matter, also reported that the Commerce Department wants access to the Chinese device maker’s facilities in order to verify the company’s claims.
Other demands could include disclosing how U.S.-made components are used in its devices, hiring a compliance official and replacing ZTE’s board and executive team.
ZTE was already under fire from U.S. intelligence officials for its links to the Chinese government — and their implications for national security — when the Commerce Department imposed a seven-year “denial of export privileges” in April over the company’s response to violations of sanctions against North Korea and Iran.
The ban prohibited ZTE from accessing U.S. technology and prompted the company to shut down most of its operations in May.
President Trump subsequently indicated he hoped to keep ZTE open — suggesting, curiously, that it would lead to “Too many jobs in China lost” — amid broader trade talks between the world’s top two economies.
Terms of an agreement with ZTE were not finalized and could change; the financial penalty, in particular, would likely be lower after accounting for millions paid last year and millions more that would be put into escrow, Reuters noted.
Any agreement is also likely to see bipartisan criticism from Congress due to concerns that Chinese-made smartphones could be used to spy on Americans.
ZTE late last month estimated it had lost more than $3 billion in the wake of the Commerce Department order.
Filed Under: Industry regulations