EC Delays Huawei, ZTE Anti-Subsidy Case: Report

The European Commission is reportedly delaying its anti-dumping case against ZTE and Huawei, easing tensions between the EU and China. Both companies have been recently criticised by the US and Canada over security concerns.

It was reported in May that the commission was in the final stages of launching the trade case and that it had “very solid evidence” that the two companies were benefiting from Chinese government subsidies.

EU diplomats and trade experts believe that the case will be delayed until next summer, possibly to wait for the response from China over a separate investigation into suspected dumping of solar panels.

No complaints

EU Trade Commissioner Karel De Grucht is believed to be the driving force behind the case and is currently gathering evidence to launch an investigation. Trade between the EU and China is believed to be worth around €500 billion this year, but De Grucht believes that China is subsidising “nearly everything”, distorting competition and harming European companies.

However his efforts are being thwarted by the fact that no EU member state or European producer of telecommunications equipment has complained, something that is a prerequisite for an investigation.

Analysts have suggested that no company wants to alienate itself from China, where demand for telecoms equipment is growing. Ericsson has even gone as far as to say that it doesn’t want an investigation.

This would mean that the EC would have to launch the case on its own initiative, something that it hasn’t done since a case against India in 1997. It would, however, still require cooperation from potentially hostile EU member states and producers.

Welcome respite

The news will be a boost at a time when other countries are targeting Chinese companies over security concerns. The Canadian government has invoked a “national security exception” that allows it to discriminate against companies deemed to be too risky to be involved in the construction of a network carrying government calls, emails and data centre services.

Huawei is believed to be the target of this exception, and along with ZTE has been accused of being a genuine security threat to the United States’ infrastructure.

The Chinese companies have both separately challenged the findings of the Intelligence Committee of the US House of Representatives, which had been investigating “the threat posed by Chinese-owned telecommunications companies working in the United States, and the government’s response to that threat.”

The report stated that neither could be trusted to be free of “foreign state influence” and that China has the “means, opportunity and motive” to use telecommunications companies for “malicious purposes.”

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