The proposal reportedly includes financial penalties for member states that use Chinese-made equipment in their telecom networks

EU member states could be forced to phase out equipment made by Chinese tech giants Huawei and ZTE in their telecommunications networks under the bloc's proposed ban, Bloomberg reported on Monday, citing people familiar with the matter.

The reported plan comes amid escalating trade tensions between China and the EU. Over the past year, Brussels and Beijing have clashed over what the bloc calls China's industrial overproduction, while the Chinese authorities accuse the EU of protectionism.

Under the proposal, European Commission Vice President Henna Virkkunen seeks to turn a 2020 recommendation on excluding "high-risk" vendors from mobile networks into a binding legal requirement, sources told the news agency.

If adopted, the rule would apply to mobile network gear and fixed-line infrastructure, as Virkkunen is said to be examining options to limit the use of Chinese equipment in fiber optic and broadband expansions. The Commission also reportedly plans to urge non-EU countries to join the ban, forming a broader coalition against Chinese telecom suppliers.

EU member states that currently make infrastructure decisions at the national level could face infringement proceedings and financial penalties under Brussels' enforcement powers, if the regulation is imposed.

While Sweden banned the use of Chinese vendors in its 5G networks years ago, other EU members continue to allow the deployment of Chinese technology in parts of their national infrastructure. Germany and Finland are reportedly considering tighter restrictions on Huawei and ZTE.

In response, the Foreign Ministry in Beijing said that banning Chinese companies from access to the EU market through administrative means without any legal grounds or factual basis severely violates market principles and the rules of fair competition. 

The latest initiative marks another phase of escalation in the worsening trade climate between Brussels and Beijing. Earlier this year, the Dutch government seized control of Netherlands-based chipmaker Nexperia, owned by China's Wingtech Technology, citing risks to Europe's technological security. The move prompted Beijing to retaliate by banning exports of Nexperia-made chips from China, reportedly forcing Amsterdam to consider handing back control of the company.

(RT.com)