Huawei's ZTE is antis by EU investigation or triggering a ripple effect

She September 16, the European Commission announced a countervailing survey of China-made wireless WAN card (WWAN). This is the first time the EU has used all trade relief tools (i.e., countervailing, anti-dumping and protective measures, commonly known as "antis") against Chinese products.　　June 30, the EU launched a Chinese-made wireless WAN card anti-dumping and protection measures investigation. The countervailing complaint was proposed by European manufacturer option.　　Option said Huawei and ZTE received subsidies from the Chinese government to produce substantial damage to European producers at low prices.　　This reporter was asked to obtain a complaint that the subsidy is mainly from the policy of loans; In addition, two companies also enjoy the corporate income tax relief, in Shenzhen and other science and technology parks to plant preferential policies, import tariff project concessions, state allocations, to lower market prices for raw materials and subsidies, local government preferences and other 6 subsidy measures. Wireless WAN cards are not the main business of Huawei and ZTE in the European market.　　However, once the EU determines that countervailing is established, the likelihood that competitors in other areas of business will initiate similar investigations is greatly increased. "For Huawei and ZTE's other products, this countervailing investigation will be a model precedent for other export industries in China," he said. Cairn Konstantinos Adamantopoulos, a Brussels lawyer, told the newspaper.　　Cairn has participated in EU countervailing investigations on behalf of India and Thailand, and has served as a longtime legal advisor to the Chinese Ministry of Commerce's mission to the EU.　　An EU trade official also told reporters that Anti-subsidy is aimed at the government rather than the individual, so the impact of countervailing decisions will be "systemic" compared to anti-dumping cases.　　A detailed statement of policy-lending allegations the European Commission believes there is ample evidence of a countervailing investigation into the Chinese-made wireless network card, which is expected to end within 13 months, the EU official said.　　Policy lending is the first target of option petition.　　Option-related charges can be divided into the following two parts: first, the Chinese National Development Bank and the National Import and export Bank to the Huawei and ZTE two companies to provide a large number of policy loans; The first is that the lending rates offered by Huawei and ZTE are not considered normal business rates. China's Ministry of Information Industry signed a cooperation agreement with the State Bank in 2005, and the bank pledged to provide 50 billion RMB loans to the information industry within five years thereafter.　　This is cited by the petition as an important example of subsidies. In addition, the petition also cited the following: 2004 import and Export bank to give Huawei 600 million yuan export credit, 2004, the country agreed in the next five years to the Huawei loans 10 billion yuan to expand the global market, 2009 Bank of China to provide ZTE 15 billion U.S. dollars loans,　　In the same year, ZTE received 10 billion US dollar credit support from the import and Export bank. In addition to policy loans, the petition argues that the Chinese government has actively intervened in banking, so Chinese commercial banks, and even foreign banks, interest rates are distorted, lower than market rates, and therefore form a politicalGovernment subsidies.　　Chain reaction the EU-sponsored countervailing investigation is likely to trigger systemic risk. In 2006, the United States launched the anti-subsidy survey on Chinese coated paper.　　2007, the United States Department of Commerce identified the appropriation, tax concessions and concessional loans in the three major categories of 10 subsidy programs, the Chinese enterprises involved in the 10.90%-20.35% of subsidies. The ruling changed the U.S. practice of not using countervailing laws against "non-market economies" since 23.　　Since then, the United States against China-made countervailing investigations ensued, in just four years, the United States launched a total of 12 countervailing investigations.　　This ripple effect is also likely to occur in Europe. The majority of the subsidies mentioned in option claims are accepted by Huawei and ZTE as a whole, rather than on wireless WAN cards. Compared with the "small device" of wireless WAN card, Huawei's main business in Europe is mobile network devices and solutions.　　Currently in the European market, Vodafone Group, France Telecom Orange Group, Telefonica Group, T, Italy Telecom and other few operators control more than 90% of Europe's market, they have business dealings with Huawei.　　Unlike anti-dumping against individual enterprises, countervailing duties target the governments of exporting countries and their policies. option in the petition, said Huawei and ZTE enjoy tax concessions, mainly refers to China's software industry and other High-tech industries in the first two years to reduce corporate income tax, the third year of halving the tax policy.　　For example, the petition alleges that the National Development Bank and the import and export bank not only provide policy loans to Huawei and ZTE, but also provide such loans to Haier, TCL, Tsinghua Tongfang and other industry companies. Behind these concrete policy measures is China's "Eleven-Five plan".　　The plan calls for the development of High-tech industries, optimizing export structures, moving up the value chain and enhancing independent innovation capabilities.　　Jappe Eckhardt, a researcher at the Department of Political Studies at the University of Antwerp, said in an interview with this newspaper that if the EU finds that Huawei and ZTE's wireless WAN cards receive government subsidies, then two other products will face similar lawsuits.　　Opiton's petition, which also begins with an emphasis on ZTE's state-owned corporate identity and the military background of Huawei's president, Ren, cites news reports pointing to Huawei's links with the Chinese pla.　　Anti-subsidy: the sunrise industry of EU legal profession?　　In Brussels, there is a saying that anti-dumping has become a "sunset industry" for lawyers, and that the EU will focus on countervailing subsidies for trade relief.　　Lawyer Cairn to this newspaper analysis of reasons that the EU recognized the status of China's market economy is becoming more and more obvious, the EU needs to prepare for the recognition of China's market economy status after the Sino-EU trade dispute.　　In addition, countervailing "is more politically correct" than anti-dumping, and is more easily supported within the EU. There is a clear dividing line within the EU on anti-dumping issues. Because of the different economic power, Italy, Spain, PortugalPortugal and other southern European countries to support anti-dumping, while the United Kingdom, the Nordic countries are clearly on the opposition side.　　But the logic behind the countervailing measures is to reduce government intervention and fair competition, which would allow economic powers that support free trade to vote in favour. But Jappe Eckhardt thinks it is too early to judge whether a subsidy case triggers a ripple effect.　　The proof of countervailing duties is very difficult, and subsidies are often given in some indirect way (e.g. energy price concessions).　　The EU trade officials said to reporters that the EU rules are stricter than the US in determining the existence and calculation of subsidies, and even EU lawyers believe that countervailing procedures and work are complex, "which is one of the reasons why the EU's anti-subsidy case against China is less than that of the United States".　　But the EU seems to be actively following the US.　　Option's petition specifically opens a chapter on the U.S. Department of Commerce's countervailing survey of several industries in China. The petition proposes that the European Commission set the benchmark for market interest rates in the light of other markets when calculating subsidies for loans. This proposal basically follows the United States in 2007 in China's anti-subsidy to the U.S. coated paper practice. At that time, the US used the short-term loan interest rate of 37 market economy countries similar to China's per capita national income.