EU, China Agree To End Dispute Over Chinese Telecommunications Subsidies

European Union and Chinese officials struck a deal to end an EU investigation into whether Chinese telecommunications companies had received illegal subsidies. The investigation had been at the center of a longstanding row between the two sides. They finalized the agreement during a meeting of trade officials in Brussels during the weekend.

The EU first launched the inquiry last year to investigate whether Chinese wireless communications companies, including Huawei Technologies Co. and ZTE Corp., had benefited from illegal subsidies to lower its prices and grow its market share in the European Union. Heavier competition from the Chinese firms in part led EU telecoms companies Ericsson, Alcatel-Lucent SA and Nokia Corp. to lay off thousands of workers. The EU had threatened to levy tariffs on Chinese telecommunications exports as a retaliatory measure, but dropped the tariff threat as part of the Saturday deal.

“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,” EU trade commissioner Karel De Gucht said in a statement Monday. De Gucht, along with Chinese Minister of Commerce Gao Hucheng, co-chaired the meeting in Brussels.

China and the EU faced similar trade tensions in 2013 when the EU decided to impose high import tariffs on Chinese solar panels. EU officials said Chinese solar panel exporters were unfairly undercutting prices to take European market share. The two sides eventually resolved that dispute by setting minimum prices on the panels and curbing European imports of Chinese solar panels.

Saturday’s deal comes as Beijing continues to push for a China-EU free-trade agreement. Earlier this year, Chinese President Xi Jinping visited Brussels to sell EU officials on the merits of such a deal. Chinese Premier Li Keqiang also met with senior EU representatives in Milan Friday, a day before the trade agreement was settled.