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EU Close to Deal Over Chinese Dumping Allegations in Europe

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The European Union's trade commissioner, Karel De Gucht is reported to have suggested that the EU would drop its investigation into Chinese telecoms vendors in exchange for a guarantee of a 30% market share for European companies selling to Chinese networks.

The EU is carrying out an investigation into Huawei and ZTE into allegations that they receive government financial support when bidding for contracts in Europe, which would be illegal under European law.

Although both companies deny the allegations, they have received unusually large lines of credit from Chinese state-controlled banks which gives them a competitive advantage when bidding for vendor financed deals.

ZTE's lines of credit amount to USD25 billion, which is said to be exceptionally high for a company with annual sales of USD8 billion. Huawei is also understood to have benefited from large credit lines, including a $30 billion facility from China Development Bank.

Regardless of the matter, some European politicians have been wary of targeting the two Chinese firms lest such action results in European suppliers being locked out of the lucrative Chinese market in return.

Such a deal though would be an implicit admission that state-support does exist, and that the market share agreement is the punishment for it.

De Gucht has also reportedly asked for the two Chinese vendors to raise their prices by nearly a third to avoid allegations of dumping that have been leveled against them.

"Asking Chinese companies to raise the price of their exports to Europe is nothing more than an attempt to drive them out of the European market," Bai Ming, a researcher with the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, told the Global Times.

A delegation from China's Ministry of Commerce met with top EU trade officials on Friday to seek a way to settle the issue without sparking a trade war.

On the web: EurActiv - Global Times

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Tags: huawei  zte