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China-EU equipment agreement hits the rocks

An agreement reached by the EU and China in 2014 regarding the sale of telecoms equipment in EU member states could be under threat.

The 2014 dispute arose when European vendors argued that their Chinese rivals were able to undercut them in both China and the EU, alleging that Huawei and ZTE were receiving subsidies from the Chinese state in order to offer their low prices.

After the EU agreed not to impose import tariffs on equipment made by these Chinese vendors, China in turn committed to fostering even competition between Chinese and overseas vendors, and a settlement was reached. However, there are now claims that China is not holding up its end of the deal.

The settlement was supposed to result in the creation of an independent watchdog to monitor the equipment markets in China and the EU, as well as preventing dubious practices such as “dumping” – saturating the market with massively underpriced products.

However, the proposed watchdog was never established, despite two years having passed since the settlement was signed. Reports have pinned China as an obstacle to this, with the country’s government unwilling to provide funding for the body as well as reluctant to agree that panel members should have no government ties.

EU officials claim that the lapsed terms of the settlement demonstrate that the European bloc lacks leverage over China. At the time of the dispute, several EU countries were hesitant to lend their support to the imposition of import tariffs for fear that they would lose out on trade with China. Vendors in particular were concerned about potentially missing out on the Chinese market.

Huawei has hit back against claims that its products are in any way inferior to European ones, with the CEO of the vendor’s Swedish subsidiary, Kenneth Fredriksen, saying: “We’re not winning business on price anymore.”

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