EUROPEAN FOREIGN POLICY SCORECARD 2013

Trade liberalisation and overall relationship

4 - Trade disputes with China

Grade: B
Unity 4/5
Resources 3/5
Outcome 6/10
Total 13/20
Scorecard 2010/11: B- (12/20)

The EU won a WTO case on rare earth minerals and launched the largest anti-subsidy case on solar panels. Europeans also had concerns about telecoms giants Huawei and ZTE. 

Europeans want their companies to be able to compete fairly against Chinese rivals. In 2012, they initiated 11 anti-dumping and anti-subsidy cases against China. The biggest and most significant was the anti-dumping case against Chinese solar-panel manufacturers which the European Commission launched in September (see component 12). However, although the original complaint was brought by German companies such as Berlin-based SolarWorld – a few years ago the global market leader – Chancellor Angela Merkel urged the European Commission not to pursue the case, which she feared could prompt Chinese retaliation against other German companies and ultimately a trade war with China. In January, the WTO ruled in the EU’s favour on Chinese export restrictions on raw materials. However, after it became clear that China did not intend to lift restrictions on the export of rare earth minerals in response to the ruling, the EU, Japan, and the US launched a second challenge in the WTO. EU Trade Commissioner Karel De Gucht said he was “left with no other choice”.

Europeans also have concerns about the export subsidies that bolster rising Chinese telecoms giants Huawei and ZTE, which are now competing with European companies such as Ericsson and Nokia. In 2012, the European Commission hinted at opening a case against Huawei and ZTE based on “solid evidence”, which prompted retaliatory warning shots from China. In the end, however, no European companies that do business in China were willing to support the case. Concerns about security and in particular about Huawei’s alleged links with the Chinese military led US authorities to block investments in 2012. In Europe, where Huawei employs more than 5,000 people, there are similar concerns. For example, the British government and Huawei staff collaborate to provide assurance that their products meet government security standards prior to being deployed on UK networks. Yet Prime Minister David Cameron welcomed Huawei’s chief executive at 10 Downing Street on the same day as the US Congress brandished his company a security threat.