EU cites Chinese telecoms Huawei and ZTE for trade violations

NEW YORK (Reuters): Europe’s top trade official for the first time late on Friday officially cited Chinese mobile telecommunications equipment makers Huawei and ZTE Corp for violating anti-dumping and anti-subsidy guidelines.

European Union Trade Commissioner Karel De Gucht said he was prepared to launch a formal investigation into anti-competitive behaviour by these Chinese companies in order to protect a “strategic” sector of Europe’s economy.

“Huawei and ZTE are dumping their products on the European market,” De Gucht told Reuters in an exclusive interview before engaging with U.S. businesses as part of his preparations for negotiating a Transatlantic free trade pact with the United States. Those talks are expected to begin in July.

An investigation now into sales practices of Chinese telecoms equipment companies would open up a new front in a multibillion-euro trade offensive against a critical partner.

The EU 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 ($372 billion) last year, with 144 billion euros going the other way.

Cheap capital for these Chinese companies “creates a distorted playing field and that is what this is about,” De Gucht said, referring to Huawei and ZTE, respectively the world’s No. 2 and No. 5 telecom equipment makers.

Huawei denied it had broken any rules. “In Europe and in all markets, Huawei always plays fair and we win business and trust from our customers through our innovative technology and quality service, rather than via pricing or subsidies,” the company said in a statement e-mailed to Reuters.

Separately, the official China Daily quoted Huawei’s Western Europe president Tao Jingwen as saying that the firm’s rivals were blaming the company for their own failures.

“Some European companies have blamed Chinese companies for their losses, but sometimes they were caused by their own laziness,” Tao said in a report carried before the publication of De Gucht’s remarks.

ZTE could not be reached immediately for comment, but the company has also in the past denied benefiting from illegal state support.