* EU trade chief says China has till June for amicable trade
* Deal needed before June 7 to avoid possible solar panel
* Telecom negotiations running in parallel with solar panel
* Mobile network sector is critical to EU
By Ethan Bilby
BRUSSELS, Feb 27 China has until June 7 to
negotiate a deal with the European Union on state subsidies for
solar panels and mobile telephone networks or face possible
punitive measures, the EU's trade chief said on Wednesday.
European Trade Commissioner Karel De Gucht told a Reuters
Summit on the future of the euro zone the Chinese had told
Brussels they wanted to negotiate an amicable solution to EU
concerns over alleged trade distortions in the two cases.
The EU executive is preparing a report on the impact of
Chinese government support for solar panel manufacturers
following a complaint by Germany's Solar World.
That could lead to the imposition of punitive import tariffs
if the Commission determines that Chinese panels benefit from
state subsidies, allowing them to be sold below cost and pushing
out EU firms.
"Provisional duties have to be decided before June 7, and
before the end of the year you have a final decision. And that's
setting the timeframe (for negotiation)," De Gucht told Reuters.
"That's also setting the timeframe for mobile networks."
"It is the Chinese who have requested that we would have
negotiations on a possible amicable solution. We have already
have contacts, we have already sent people to Beijing, and the
Chinese already came to Brussels," he said.
The hi-tech telecoms case is less advanced but potentially
far bigger in political and economic impact.
The EU is collecting evidence to prepare a possible case
against Chinese network equipment makers Huawei and
ZTE over state subsidies, but has not received a
formal complaint from European industry.
De Gucht said the Commission had the power to initiate
proceedings on its own authority even if no European competitor
A complaint is the normal starting point for an
investigation, but European manufacturers Ericsson,
Alcatel-Lucent and Nokia Siemens Networks
have remained silent because trade experts say they fear
retaliation against their business in China.
Solar panels are the biggest import sector ever targeted by
an EU trade investigation, with over $25 billion worth of
Chinese panels imported in 2011.
The case over mobile network equipment makers would dwarf
that in size. The European telecoms industry accounts for an
estimated 4.8 percent of the EU's gross domestic product.
Such self-initiated cases can be awkward for the Commission,
as it appears to be both complainant and judge and still needs
evidence from EU producers and approval from EU member states,
which ultimately vote on Brussels' proposals to impose duties.
De Gucht said that talks over alleged state subsidies by
China to the telecom firms were running in parallel with
negotiations to avoid duties on Chinese solar panels.
There were also "serious security concerns" involving mobile
telecom networks, which had become the backbone of modern
European society, he said, noting that the United States and
Australia had effectively shut Huawei out of their markets.
Diplomats said EU countries are divided in their approach to
Huawei, with Britain and the Netherlands embracing the Chinese
firm as a major job provider while others are more wary of
Chinese inroads into such a sensitive sector.
A leaked internal EU report last year said that action
against Chinese telecom equipment makers was needed because
their increasing dominance of mobile networks makes them a
threat to security.
The 27-nation bloc is China's largest trade partner, and
China is the European Union's second-biggest trading partner
after the United States. Trade between the two was forecast to
hit a record 500 billion euros ($653.65 billion) in 2012.
($1 = 0.7649 euros)
(Reporting By Ethan Bilby; Editing by Paul Taylor)