EU escalating telecom dispute to harm trade ties

BEIJING, May 21 (Xinhua) -- Chinese experts said the European Commission's planned anti-dumping and anti-subsidy probes into mobile telecommunications equipment imports from China will escalate bilateral trade tensions.

The investigations, announced last week following the commission's decision to impose hefty taxes on Chinese solar panels earlier this month, could create turbulence in Sino-European economic and trade relations, said Sang Baichuan, a professor of international economics at the Beijing-based University of International Business and Economics.

The move is widely believed to be aimed at Huawei and ZTE, two of the world's biggest telecom equipment manufacturers.

Statistics show that Europe accounts for 15 percent of Huawei's overseas business.

Both companies have refuted accusations of using anti-competitive practices, saying they have obtained a price advantage via improved technology and efficiency rather than illegal government subsidies.

Data shows that Chinese manufacturers annually export telecom products worth more than 1 billion euros to the EU.

Sang said the commission's protectionism targeting China will do harm to the latter without benefiting the 27-nation bloc itself.

He said the EU took action against Chinese telecom equipment makers without receiving complaints from local manufacturers as a result of its continued economic slump.

The EU's move will likely create a "lose-lose" situation, as Chinese companies' European counterparts are deeply engaged in China, which has overtaken the United States as the world's largest smartphone market, said Ren Baiming, a senior international market researcher at the Ministry of Commerce (MOC).

"China will likely take retaliatory action," Ren said.

MOC spokesman Shen Danyang warned last week that China will take firm action to protect its legitimate interests in line with World Trade Organization rules and Chinese law if the EU insists on launching the probe.

"EU companies have a bigger market share in China than Chinese firms do in the eurozone," Shen noted, adding that both sides have been discussing the issue since the second half of last year.

China is currently involved in 18 out of 31 ongoing trade investigations launched by the EU. Bilateral trade declined by 3.7 percent year on year in 2012.

The European Commission said any probes into Chinese telecom products will not be started for the time being in order to allow for negotiations and the creation of an amicable solution.

However, Chinese analysts believe the EU probes will likely take place as the commission resorts to trade protectionism in exchange of more market shares in China for European companies wont work.

Earlier this year, the EU reportedly asked Huawei and ZTE to raise the prices of their exports to Europe by 29 percent and demanded that the Chinese side offer 30 percent of its telecommunications market to European manufacturers in return for dropping investigations into the Chinese companies.

The EU's latest protectionism-for-market decision has even drawn criticism from some member states and European telecom providers themselves, with Britain and the Netherlands, as well as European manufacturer Ericsson, openly opposing the investigations.

Last Tuesday, Ericsson, Huawei and Nokia Siemens Networks signed a memorandum of understanding that includes efforts to make their

operation support system interfaces inter-operable, heralding closer cooperation between the three rivals.

In addition, Huawei has expressed willingness to make Europe its largest market following China, as the United States decided to restrict government purchases of Chinese IT equipment in late March.

In September last year, Huawei unveiled a 2-billion-U.S. dollar investment plan to expand its operations in Britain over the next five years.

http://news.xinhuanet.com/english/indepth/2013-05/21/c_132397849.htm