Traditionally, anti-“dumping” laws are used by countries to erect non-market barriers to imports.
Sometimes, when the importer’s prices are much lower than domestic producers’ prices, thanks to subsidies the importer may have received in their home country, one could argue that the application of these laws is justified. In other situations though, when these laws are used to turn importers into pawns in tit-for-tat political games between countries, their use is a bit harder to justify.
Consider Huawei and ZTE, two Chinese makers of telecom equipment.
Long targeted in the US and elsewhere for supposed connections to the Chinese military, they found the going easier in Europe. But not anymore, writes the Economist.
They are accused not of being spies (though Europeans also worry about security) but of being too cheap. On May 15th the European Commission agreed “in principle” to investigate the dumping of and subsidies for Chinese mobile-network equipment, of which the EU imports just over €1 billion-worth ($1.3 billion) a year. Karel De Gucht, the EU’s trade commissioner, says he will not start yet, to allow time for negotiations. Huawei, which is privately owned, has long denied being a tool of the Chinese state. ZTE, which is listed, insists it is “in full conformity” with the rules of the World Trade Organisation.
Interestingly, European telecommunication equipment makers are not too enthused about this unusual move and are fretting about potential tit-for-tat retaliations that may affect them in the very large, and growing, Chinese market.
Nokia Siemens Networks (NSN)
says it opposes “any efforts to erect trade barriers [and has] urged the commission to refrain from taking such steps”. Ericsson has damned Mr De Gucht’s foray. “We see nothing beneficial coming out of this,” says Ulf Pehrsson, the company’s head of government and industry relations. “Any protectionist measures taken are bound to trigger other protectionist measures.”
With billions of dollars in bilateral trade at stake, this situation is sure to be monitored closely in different parts of Europe and China.