China and the European Union will reach a deal to resolve a long-running telecoms dispute by the end of October, Reuters reports, citing unnamed people close to the matter. According to the same source, if China agrees to some concessions, the EU's trade chief is ready to drop a probe into what Brussels claims are illegal subsidies to Chinese makers of equipment for mobile telecom networks.
Imports of such equipment into the EU are worth EUR 1 billion per year, bringing Chinese companies into competition with European firms including Ericsson, Nokia Siemens Networks and Alcatel-Lucent. Beijing is studying a deal in which China commits to limit its export credits to telecoms equipment makers Huawei and ZTE, according to people close to the negotiations. China and EU would also agree to monitor the market share of Chinese telecoms companies in Europe and European companies in China. The parties also plan to cooperate on industrial research and standardisation in the telecoms sector.
"The two parties have reached a common understanding on all the four issues and they are looking to cut a final deal," said one person close to the talks. EU Trade Commissioner Karel De Gucht plans to reach a deal before he leaves office on 31 October, another person added. "This investigation was De Gucht's issue. He doesn't want to leave this with his successor," the person said, saying that De Gucht had held phone conversations with China's Minister of Commerce Gao Hucheng.
According to an EU document seen by Reuters, the EC claims Huawei's market share increase in the European telecoms equipment from 2.5 percent in 2006 to 25 percent share this year could only have been achieved with state aid, which is illegal under global trade rules. The document also states Huawei and ZTE have prices that are 18 percent below those of EU producers, hurting the profitability of European manufacturers.
Chinese Premier Li Keqiang are expected to discuss the issue at a summit that will be held in Milan on 16 and 17 October. The European Commission declined official comment.
