Wielding protectionism baton harms China-EU trade ties

EU commission has announced that it will adopt both anti-dumping and anti-subsidy investigations on Chinese mobile telecommunication equipment.

This is a fresh move to further stove trade frictions between the two sides, already at odds over recent EU proposal to levy punitive duties on Chinese solar panels.

By wielding the baton of trade protectionism, EU, instead of ridding itself of the economic doldrums, might lose the opportunities the Chinese firms bring to its development.

European Trade Commissioner Karel De Gucht said earlier he and fellow commissioners had agreed in principle to open an anti-dumping and anti-subsidy investigation into alleged anti-competitive behavior by Chinese mobile telecom equipment companies.

The latest case is apparently aimed at Huawei and ZTE, China's two leading telecommunication systems and equipment providers, which serve customers across the world and cooperate with many European partners.

China-EU cooperation in the wireless communications sector has long been mutually beneficial, and EU companies even take a bigger market share in China than Chinese firms do in the eurozone.

Shen Danyang, a spokesman for the Ministry of Commerce, warned the EU against taking measures that would benefit neither side.

"If the European side insists on opening an investigation, the Chinese side will according to WTO rules and Chinese law take firm measures to safeguard its legitimate rights and interests, and the consequences must be borne by the party provoking the friction," Shen told reporters in Beijing.

Both Huawei and ZTE have denied benefiting from illegal subsidies. Huawei said it always plays fair and wins business and trust through innovative technology and quality service, rather than via pricing or subsidies.

For ZTE, its spokesman Dai Shu said the company has yet to receive any official letter from the EU, but insisted the company receives no illegal subsidies to do business in the region.

On their part, European telecom companies, including Ericsson AB and Nokia Siemens Networks, also said they opposed the move.

Earlier, EU Commission is reported to back a proposal to levy provisional duties ranging from 37 to 68 percent on Chinese solar panels, though the measures still have to be reviewed by EU member states and published in EU's official journal before going into effect.

Analysts said the punitive tariffs, if approved, would affect about 20 billion U.S. dollars worth of Chinese solar products exports, making it the largest trade disputes between China and EU to date.

Commerce Ministry spokesman Shen Danyang, hoping the reports about the duties were unreliable, said, "China attaches high importance to these reports. If they are true, the EU's move seriously violates multilateral consensus of avoiding protectionism and will take its toll on China-EU economic ties."

Shen said "provoking trade friction with China" was like "dropping a boulder on one's own foot" and would not help Europe break free from economic crisis.

The EU's actions will also take its toll on European solar producers. For a long time, China and EU have been interdependent and mutually beneficial in the photovoltaic industry, with the European photovoltaic market having high dependence on Chinese products.

The Alliance for Affordable Solar Energy, a coalition of more than 450 European photovoltaic companies, called the proposed punitive tariffs "extremely disturbing," saying it would cause "irreversible damage" to Europe's entire photovoltaic value chain.

"Protective duties are poisonous for the solar industry", Udo Mohrstedt, chief executive of IBC Solar, a Germany-based global manufacturer said. "These guarding measures will endanger more than 70,000 jobs in medium-sized companies in Germany alone. The Commission must stop this dangerous protectionism."

Fan Zhenhua, legal affairs supervisor with Yingli Solar, the world's largest fully vertically integrated photovoltaic manufacturer, urged the EU to prudently review the proposal.

Liang Tian, public relations supervisor with the Baoding-based company in north China's Hebei Province, said by approving the proposal, EU would be like lifting a rock to drop on its own feet.

According to a research report released by Switzerland on April 19, the measures against Chinese solar products would cost Germany 84,700 jobs within three years and 242,000 jobs within European Union at large, with Germany being the most severely affected.

China and EU are important trade partners for each other. As EU is still plagued by economic contraction, China's investment and trade will be conducive to its striving for a quick recovery.