ZTE executives meet with US Commerce Department officials to work out final details of compliance deal

ZTE Corp, the Chinese telecommunications giant accused of violating US sanctions against North Korea and Iran, met with US Commerce Department officials to work out details of a final compliance deal that will help restart its business, according to five people with knowledge of the matter.

A group of newly appointed senior ZTE managers held talks with officials of the department’s Bureau of Industry and Security in Washington on Monday, said two of the sources, who asked not to be named because the discussions were private.

The parties discussed technical details of a required escrow account, among other conditions US Commerce Secretary Wilbur Ross put forward in a deal that will pull the company from the brink of collapse, the sources said.

ZTE has been in a months-long effort to resume operations after the US banned it in mid-April from buying American parts, penalising ZTE for violating US trade laws by selling products to Iran and North Korea.

In early 2017, ZTE was fined for selling millions of dollars’ worth of hardware and software from US technology companies to Iran’s largest telecommunications carrier. ZTE paid a US$1 billion fine but was found to have lied about penalising certain workers involved. In April, the Commerce Department said the company failed to make good on its remedies.

Though unrelated to trade and investment practices that prompted US President Donald Trump to impose punitive tariffs on Chinese imports this month, the ban on ZTE's business with American companies became a bargaining chip of sorts for Trump in his attempts to force China to reduce its record trade surplus with the US.

ZTE’s new management vows to uphold compliance as a top priority

ZTE has also become a symbol of what many US lawmakers consider Beijing's efforts to produce domestic tech industry “champions” that simultaneously compete with US companies and undermine American security interests.