The EU has ended a long-running telecoms row with China, the bloc’s trade chief said yesterday, dropping a threat to levy punitive tariffs on Chinese telecoms exports and easing tensions between two of the world’s top trading powers.
As Reuters reported exclusively on Oct. 8, the deal struck between Brussels and Beijing sets out a framework for China to address the EU’s concerns about subsidies to Huawei Technologies Co (華為), China’s No. 2 telecoms equipment maker, and its smaller rival ZTE Corp (中興).
The resolution of the dispute marks the latest step in improving bilateral trade relations that were helped by a visit by Chinese President Xi Jinping (習近平) to Brussels in March and which Beijing hopes will pave the way for a free-trade agreement between the two sides.
“The EU and China have resolved the telecoms case,” EU Commissioner for Trade Karel de Gucht said in a statement yesterday.
“The investigation into mobile telecommunications networks from China will not be pursued,” De Gucht said of the formal threat of duties against the country’s telecoms exports that he launched on May 15 last year.
Imports of Chinese telecoms equipment into the EU are worth about 1 billion euros (US$1.3 billion) a year, bringing China into competition with European companies including Ericsson AB — the world’s biggest mobile telecom equipment maker — Nokia Siemens Networks and Alcatel-Lucent SA.
According to an EU document seen by Reuters, the European Commission says the swift rise of Shenzhen-based Huawei in the European telecoms equipment market — the telecom went from having a 2.5 percent of the market in 2006 to commanding a 25 percent share today — could only have been achieved with state aid that global trade rules deem illegal.
Both Huawei and ZTE deny receiving illegal subsidies.
China exports network equipment, base stations and connections used by telecom providers to transmit voice and data messages. After the US and Australia effectively shut Huawei out of their markets over security concerns, Europe has become a crucial market for China.
On the other side, De Gucht was under pressure from EU countries to resolve the issue because European industries ranging from healthcare to water utilities are becoming reliant on cheaper China-made wireless technology.
After more than a year of discussions, De Gucht and Chinese Minister of Commerce Gao Hucheng (高虎城) sealed the deal on Saturday, a day after Chinese Premier Li Keqiang (李克強) met senior EU officials at a summit in Milan, Italy.
According to De Gucht, Beijing has agreed to discuss limiting its export credits to Chinese companies, steps Brussels hopes will bring state support for national champions in line with international rules.
Both sides have also agreed to task an independent authority with monitoring the market shares of Chinese telecoms companies in Europe and that of their European counterparts in China.
In addition, Brussels and Beijing are to cooperate on industrial research and have agreed to equal treatment of companies bidding for publicly-funded research and development projects.
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