Trade Probe into China Telecoms May Be Imminent, EU Commission Warns

The European Commission could soon find itself on a trade collision course with China regarding imports of mobile telecommunications networks and their essential elements, having announced last week that it is ready to open an investigation into alleged dumping and unfair subsidies should bilateral negotiations on the subject fail.

The Commission has said that it has been gathering evidence for the past year in advance of a possible probe. However, it will hold off on launching the anti-dumping and anti-subsidy investigation for the time being, EU Trade Commissioner Karel De Gucht explained in a statement last week, in order to “allow for negotiations towards an amicable solution with the Chinese authorities.”

In an interview with Reuters on Friday, the EU trade chief specifically cited telecoms equipment makers Huawei and ZTE Corp - two of the world’s largest producers in this field - as being among those that are allegedly dumping their products on the EU market. Europe accounts for 15 percent of the former’s overseas business, according to Chinese statistics.

The probe, if launched, would deal with the hardware used in telecommunications networks across Europe, such as base stations, for instance. It would not deal with mobile phones, antennas, or other smaller products. Chinese exports of these telecommunications products to the EU are valued at just over €1 billion a year, according to European Commission estimates.

EU, China trade tensions on the rise

The news has ramped up tensions between the two trading partners, who are already in the midst of a heated row over the Commission’s plan to impose anti-dumping duties on solar panel imports from China. However, EU officials have been quick to quell any suggestions that Brussels and Beijing might be involved in a “trade war,” noting that the solar and telecoms probes are separate processes.

Chinese officials, for their part, have cautioned that the proposed telecoms investigation could have serious effects on bilateral trade ties if the Commission indeed decides to move forward.

No timeline for investigation launch, but clock is “ticking”

EU officials have not outlined what would be the deadline for launching an investigation, or if such a deadline is in place. De Gucht has said that he will revert back to the College of Commissioners “in due course,” without specifying further details.

“The clock is ticking,” EU Trade Spokesman John Clancy told reporters last week in response to questions regarding timeline. “We have had an open-door policy for negotiations with our Chinese partners for approximately one year, and we look forward, at this stage, that the Chinese authorities step forward and engage with us in terms of these specific negotiations in a serious manner, because this is currently a very serious situation that we are looking at.”