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September 24, 2017

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China seeks to avoid trade spat, EU mulls tactics

BRUSSELS -- China sought on Thursday to defuse a deepening trade conflict over accusations that it subsidizes hi-tech firms exporting to Europe, as EU trade ministers met to discuss a new tactic against Chinese companies seen as trading unfairly.

Chinese Commerce Minister Chen Deming, on a visit to Brussels, said Beijing would seek to "exercise restraint in trade remedy measures," saying he wanted to see more European hi-tech exports to China.

EU Trade Commissioner Karel De Gucht, who diplomats say is considering action against China's top telecoms gear makers Huawei and ZTE Corp., said he wanted to agree "conciliatory practices" but added that China and Europe still needed to address their differences.

"It is very important that China and the EU address the problem of advanced technologies and how we handle this, and it is not limited to telecoms," De Gucht told a news conference, flanked by Chen.

"There is a problem and either we resolve it together or sooner or later it will end up in trade defense instruments," De Gucht said, referring to measures to counter subsidies and imports sold at artificially low prices.

"It will be very important to agree conciliatory practices," he said.

The EU executive thinks Huawei and ZTE receive illegal state subsidies to undercut rivals in Europe — an accusation the two companies deny.

Chen declined to comment on the case, but said he was ready to "work together with Europe and advance cooperation."

The EU has stepped up its fight against what it sees as unfair trade practices, challenging Chinese subsidies to makers of glossy paper and looking into complaints of cheap credit to Chinese firms.

In the case of Huawei and ZTE, the accusation is that their low prices hurt European equipment suppliers such as Alcatel-Lucent and Nokia-Siemens Networks.

The United States has also taken action against China, imposing punitive import duties on a number of Chinese products — including solar panels and steel products — that it believes are unfairly priced or subsidized.

Going "Ex Officio"

EU trade ministers met De Gucht earlier on Thursday to sound out support for possible use of a new tactic by the EU executive against Chinese companies accused of unfair trading.

Many European companies would like protection from Chinese imports sold onto the EU market at what they consider artificially low prices. But they fear that, if they start their own industry complaints, they will be vulnerable to retaliation from the Chinese government, which could hamper their business in an increasingly important market.

De Gucht said that the Commission might in future launch cases on its own initiative, so that no foreign government could blame a European company for launching a case.

"I am considering the use of 'ex officio', which means the Commission launches trade defense cases by itself," he told a news conference after the trade ministers' meeting, without specifically relating the measure to China.

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