EU stalls investigation into Huawei and ZTE

EU stalls investigation into Huawei and ZTE

The European Union (EU) has held up a controversial trade case against equipment vendors Huawei and ZTE investigating whether the two had received illegal subsidies from the Chinese government.

The Financial Times reports that EU trade commissioner, Karel De Gucht, told officials that the anti-subsidy case required stronger evidence before it could proceed.

This is despite reports in May that Gucht had told EU officials there was “very solid evidence” that the vendors had benefitted from subsidies.

Staff at the European Commission insist that the stalling of the case is not related to the visit of Chinese premier Wen Jiabao, who is due to attend a summit with European leaders today.

The publication cited unnamed EU officials as saying that the decision came after Chinese diplomats indicated Beijing was interested in negotiating to resolve the dispute.

Although it is claimed that the case has not been dropped, a lack of new evidence from European vendors, Ericsson, Nokia Siemens Networks and Alcatel-Lucent, which all have interests in China, is thought to be a key factor in its lack of progress.

Should the case still go ahead the EC would have to prove that European companies were harmed by the illegal subsidies, not just that the subsidies exist.

The EU’s stance contrasts starkly to the US, which earlier this month called Huawei and ZTE to testify at a hearing of the US House of Representatives Intelligence Committee. The committee is investigating whether the two vendors have rigged their equipment for espionage purposes.

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