* EU Commission will first seek agreement with China
* Telecom investigation would be launched by Commission
* Chinese imports of products into EU more than 1 bln euros
By Ethan Bilby
BRUSSELS, May 15 The European Commission has
told China it is prepared to launch an investigation into
anti-competitive behaviour by producers of mobile telecoms
equipment, opening a new front in a multi-billion-euro trade
offensive against a critical partner.
European Trade Commissioner Karel De Gucht said he and
fellow commissioners had agreed in principle to open an
anti-dumping and anti-subsidy case against China, but would
first seek to negotiate a solution with Chinese authorities.
"The clock is ticking. We have had an open-door policy for
negotiations with our Chinese partners for approximately one
year now and we hope that the Chinese authorities step forward
and engage with us in a serious manner," De Gucht's spokesman
told a news briefing on Wednesday.
While no companies were named in the statement from De
Gucht, officials have in the past said Huawei and ZTE
Corp, the world's second- and fifth-largest telecoms
equipment makers, were the objects of their concern.
In a statement, Huawei said it was disappointed the
Commission had taken the unprecedented step of threatening to
launch a case on its own initiative, rather than based on
complaints from European companies.
It also dismissed the allegation that it was selling
telecoms equipment below cost to secure market share.
"Huawei is confident that these unfounded accusations can be
addressed and amicable solutions can be found," it said.
"Regrettably, to date the Commission has not responded to
Huawei's requests for meetings and has relied upon
unsubstantiated and incorrect information."
ERICSSON OPPOSES MOVE
The Commission's move, which is not supported by all member
states or by Sweden's Ericsson, the global industry
leader, runs the risk of sparking a trade conflict with China.
The European Union is China's most important trading
partner, while for the EU, China is second only to the United
States. Chinese exports of goods to the 27-member bloc totalled
290 billion euros ($376 billion) last year, with 144 billion
euros going the other way.
The EU now has 31 ongoing trade investigations, 18 of them
involving China. The largest to date is that into 21 billion
euros of imports from China of solar panels, cells and wafers,
for which it is set to impose punitive duties.
While European manufacturers such as Ericsson, Nokia Siemens
Networks and Alcatel-Lucent have suffered as
a result of cheap Asian imports, they are not prepared to make a
formal complaint for fear of Chinese reprisals, which has made
it hard for the Commission to gather evidence.
The EU said that by launching a case on its own initiative -
known as an ex-officio case - it would provide a degree of
protection for EU companies too concerned to step forward.
Chinese telecoms operators will start awarding contracts for
super-fast mobile networks this year, expected to give a big
boost to both Huawei and ZTE.
China exports network equipment, base stations and
connections used by telecoms providers to transmit voice and
data messages worth more than 1 billion euros a year to the
European Union, giving it almost a quarter of the market.
The investigation is not into end-user devices such as
telephones and modems but into interconnecting equipment.
Ericsson, the global leader with around 35 percent of the
mobile equipment market, said it opposed the Commission move.
"Ericsson is a strong supporter of free trade," said Ulf
Pehrsson, Ericsson's head of government and industry relations.
"We don't believe in this type of unilateral measure."