Europe, China settle differences over mobile network kit subsidies

As China and Europe plough research dollars into 5G, the pair have thrashed out a key trade agreement over mobile networks that should make cooperation a little easier.

Europe and China are on friendlier terms after trade representatives from both sides settled concerns over Chinese subsidies on mobile network equipment destined for Europe.

The "amicable settlement", announced on Monday by the European Commission, puts an end to a one-year standoff between China and Europe that saw accusations fly from both sides that the other propped up key exports by either subsidising domestic industries or dumping their goods in the foreign market.

China's quibbles focused on Europe supporting its huge wine industry while Europe fretted over the fate of its mobile network industry due to China doing the same for its growing mobile network equipment sector, worth €1bn in European exports each year.

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Europe's trade commissioner Karel De Gucht last May threatened to investigate whether China was subsidising or underpricing mobile equipment in Europe relative to China. China's trade authority shortly after countered with a claim that Europe was subsidising the nearly €1bn in wine it exports to China each year.

World Trade Organisation members, including the EU, can impose additional duties on imported products to prevent damage to local industries from foreign government subsidies and dumping. At the end of 2012, Europe had 102 anti-dumping and 10 anti-subsidy measures in place, while China has 110 and four respectively.

China however dropped its claim over wine exports this March, and Europe responded a week later by dropping the anti-dumping side of the investigation, instead focusing on Chinese mobile network subsidies.

Despite ongoing concerns over the subsidies, Europe said it would defer its investigation while it and China brokered a solution.

The settlement reached yesterday put an end to that inquiry with a number of measures to boost access of EU and Chinese players to domestic markets. The agreement comes as both China and Europe plough research dollars into the development of 5G networks in each territory. So far, Europe has teamed up South Korea on 5G research , with Europe having committed €700m over the next seven years into its 5G Public-Private Partnership. China meanwhile has its government funded IMT-2020 5G working group, which has teamed up with South Korea's efforts.  

The main points of the settlement include a new independent body tasked with monitoring the Chinese and EU telecoms markets; guaranteed access to the relevant Chinese standard settings body for EU companies without discrimination; and equal treatment of companies bidding for publicly-funded R&D projects.

"I am pleased that the EU and China have resolved the telecoms case. The EU pursues every opportunity to level out the playing field for our companies by engaging with our strategic partners including China. The concerns that have led us to launch the case last May can now be addressed in a systematic and regular dialogue between the two sides for the benefit of our industry," said De Gucht.

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