EU says it's ready to launch trade probe into Chinese vendors

The European Commission said on Wednesday it is ready to launch an investigation over alleged dumping by, and subsidies for, Chinese mobile equipment manufacturers, even though Europe's manufacturers are clearly not in favour of a probe.

EU trade chief Karel De Gucht said in a statement that the European Commission has taken a decision in principle to "open an ex officio anti-dumping and an anti-subsidy investigation concerning imports of mobile telecommunications networks and their essential elements from China."

Such a probe would largely concern Huawei and ZTE, the two leading Chinese equipment manufacturers operating in Europe. The statement noted that China exports telecommunication network equipment to the EU market with a value of around just over €1 billion per year.

De Gucht added that an amicable solution with the Chinese authorities would be sought before any action is taken. He noted that an ex officio trade defence action allows the European Commission to launch a trade defence investigation on its own initiative without an official complaint by the EU industry. He said this approach also offers a degree of protection "as it offers a 'shield' when the risk of retaliation against European companies asking for trade defence instruments is high."

The EU has been acting without the involvement of European manufacturers Ericsson, Alcatel-Lucent and Nokia Siemens Networks, which reportedly fear they would be shut out of the lucrative Chinese market if they support an anti-subsidy case.

News that the EU could launch an investigation into Chinese vendors comes at a particularly delicate time for Europe's manufacturers, which hope to participate in an upcoming multibillion-dollar tender for the TD-LTE network deployment of China Mobile. Ericsson has already stated that it hopes to gain a larger slice of the deal than the 8 per cent it won in the first bidding round in 2012.

According to the Wall Street Journal, Ericsson's head of government and industry relations .Ulf Pehrsson said the Swedish vendor opposes starting the investigation.

"We don't believe in this type of unilateral measure," Pehrsson told the Journal. "Ericsson is supporting global rules that apply for all industry players. The EU faces the risk of initiating a negative spiral by targeting individual firms."

Sweden has been one of the most vocal opponents to the EU plan, although there has been opposition from other countries that see Huawei and ZTE as important creators of jobs.

For their part, the Chinese vendors vigorously deny receiving any illegal subsidies, and Huawei said it objects to the investigation. According to Dow Jones Newswires, ZTE said it has not been contacted by European Union officials about a potential investigation and said it is confident that a probe would not uncover any illegal trade practices. "We are very confident," George Sun, ZTE's head of corporate strategy, told Dow Jones Newswires. "We are a publicly listed company, so we have to comply with regulation."

For more:
- see this EU statement
- see this Reuters article
- see this WSJ article (sub. req.)
- see this Dow Jones Newswires article (via Total Telecom)

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