President Trump on Tuesday suggested a sales ban on Chinese telecommunications firm ZTE could be lifted if the company makes sweeping changes to its management structure and purchases a certain amount of U.S. products.
The Commerce Department’s Bureau of Industry and Security in April imposed a denial order to prevent any U.S. company from selling products to ZTE for seven years after the firm was found to have violated sanctions on Iran and North Korea and subsequently made false statements to the federal government during and after settlement negotiations. Lawmakers and elected officials for years have warned that ZTE is essentially operating as conduit for Chinese espionage in the U.S.
The company has appealed the decision and the Chinese government has reportedly intervened on behalf of the firm during discussions on a broader trade agreement with the Trump administration. Government officials, including Commerce Secretary Wilbur Ross, have sought to separate the ongoing ZTE negotiations from the trade discussions with China, though Trump has repeatedly linked the two together.
Trump told reporters that U.S. companies have voiced concerns over the impact the ZTE sales ban could have on their operations. While he did not name any businesses specifically, Qualcomm sells a large amount of microchips to the firm. A spokesperson for the San Diego-based company did not immediately respond to request for comment.
The denial order could be lifted if ZTE pays over a billion dollars in fines and overhauls its executive team, Trump suggested before a private Oval Office meeting with South Korean President Moon Jae-in.
“They could pay a big price without necessarily damaging all of these American companies, which they are, because you know you are talking about tremendous amounts ever money and jobs to American companies,” he told reporters. “I envision new management, a new board, and very, very strict security rules. And I also envision that they will have to buy a big percentage of their parts and equipment from American companies.”
A spokesman for the Commerce Department’s security office did not immediately respond to request for comment.
The ZTE ban could also have a significant impact on rural telecommunications providers who rely on the Chinese firm for low-cost equipment. The Federal Communications Commission is considering banning smaller carriers that receive funding from the popular Universal Service Fund from doing business with ZTE or its main Chinese competitor Huawei Technologies.
