October 10, 2014 / 11:04 AM / 4 years ago

EU says hopes to resolve China telecoms dispute next week

BERLIN (Reuters) - China and the European Union aim to end a long-running telecoms row next week, the EU’s trade chief said on Friday, potentially easing tensions between two of the world’s top trading powers.

European Trade Commissioner Karel De Gucht speaks during a news conference at the EU Commission headquarters in Brussels March 27, 2014.REUTERS/Francois Lenoir

Reuters reported exclusively this week that Europe was close to a deal with Beijing on defusing the issue of what Brussels says are illegal subsidies to Chinese makers of equipment for mobile telecom networks.

De Gucht confirmed the progress, telling reporters at an event in Berlin: “We are confident that the subsidy proceedings against the network providers can be resolved next week.”

He gave no details but the EU and China are understood to have prepared the draft of a deal ahead of a meeting between Chinese Premier Li Keqiang and senior EU officials at a summit in Milan on Oct. 16-17.

Imports of such telecoms equipment into the EU are worth an annual 1 billion euros ($1.3 billion) and bring Chinese companies into competition with European companies including Ericsson, the world’s biggest mobile telecom equipment maker, Nokia Siemens Networks [NOKI.UL] and Alcatel-Lucent.

According to an EU document seen by Reuters, the Commission says the swift rise of Chinese manufacturer Huawei [HWT.UL] in the European telecoms equipment market to a 25 percent market share from 2.5 percent in 2006, could only have been achieved with state aid that global trade rules say are illegal.

Beijing is considering a deal in which China promises to limit its export credits to Huawei, China’s No. 2 telecoms equipment maker, and smaller ZTE, people close to the talks told Reuters.

Both sides would also agree to monitor the market share of Chinese telecoms companies in Europe and European companies in China. They would also cooperate on industrial research and standardization in the telecoms sector.

Resolving the telecoms issue could dramatically change the tone of the bilateral relationship.

Europe is China’s most important trading partner and for the EU, China is second only to the United States. A successful telecoms agreement could pave the way for a wider free-trade accord.

Writing by Robin Emmott; Editing by David Holmes

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