Two of Europe's biggest telecommunications equipment makers, Ericsson and Nokia Siemens, have urged the European Commission to back off from threatening tariffs on their Chinese rivals in a row over alleged illegal government subsidies.
The European Commission said on Wednesday that it was prepared to probe possible Chinese subsidies to network makers such as Huawei Technologies and ZTE and the possible sale of equipment in the EU below cost. The inquiries would cover EU imports of more than €1 billion (HK$10 billion) a year and determine whether these shipments harmed European producers.
"Ericsson does not support this move by the Commission," said Ulf Pehrsson, head of government and industry relations at the Swedish company, the world's largest maker of wireless networks. "We don't believe in this type of unilateral measure. Our policy is for open, free and unrestricted trade and global supply chains."
Barry French, a spokesman at Nokia Siemens, said: "We absolutely oppose any efforts to restrict free trade and erect trade barriers of any kind and have urged the commission to refrain from taking such steps, We have made that position clear to the commission both verbally and in writing."
The threat of European tariffs against China's manufacturers highlights the EU's growing concern about Chinese dominance of markets in Europe and its readiness to make imports more expensive in a bid to aid domestic competitors. The EU is the biggest export market for the mainland, which is the bloc's second-largest trading partner, after the United States.
However, the idea of tariffs is failing to gain support from Europe's biggest equipment makers, because they are as much concerned about generating sales from the booming Chinese market as they are about fending off price competition at home, where phone carriers such as Telecom Italia and Royal KPN are struggling to cut debt.
ZTE spokesman Dai Shu said: "This is the first time the EU has initiated this type of an investigation without a complaint from the vendors. It's kind of weird. There are no specific vendors who initiated these allegations."
Beijing is evaluating bids for the roll-out of high-speed fourth-generation mobile networks, and Western equipment makers are hoping to get a share of the contracts.