The EU is set to investigate alleged illegal subsidies paid by the Chinese government to mobile equipment makers Huawei and ZTE.
In a probe that would be the biggest of its kind in years, EU officials are expected to study whether the companies had benefited from subsidies that allowed them to “dump” products on the European market at below cost price.
According to the Financial Times, the EU has briefed trade officials in the member states over “very solid evidence” and could bring a formal case within weeks.
If the official probe found that China was breaching trade regulations import regulators could hit the companies with tariffs to counter the subsidies, the FT said.
It’s undeniable that many European companies are unwilling to come forward and make justified trade defence complaints due to fear of consequences for their business
The investigation would also be an exceptional case because it is expected to be launched by EU officials themselves, rather than in response to complaints from a European company.
According to Karel De Gucht, European Commissioner for Trade, the rise in what he had branded “state capitalism” in China, Russian, Vietnam and other emerging countries make it hard for Europeans to compete, and the scale of the potential export markets put companies off making official complaints.
“It’s undeniable that many European companies are unwilling to come forward and make justified trade defence complaints due to fear of consequences for their business,” he told a conference earlier this month.
“The consequences can be serious for companies that export to or invest in the country in question. In our current system it is not clear how we ensure these companies have a fair shot.”
Disclaimer: Some pages on this site may include an affiliate link. This does not effect our editorial in any way.
