China has till June for solar, telecoms trade deal -- EU

BRUSSELS -- China has until June 7 to negotiate a deal with the European Union on state subsidies for solar panels and mobile telephone networks or face possible punitive measures, the EU's trade chief said on Wednesday.

European Trade Commissioner Karel De Gucht told a Reuters Summit on the future of the euro zone the Chinese had told Brussels they wanted to negotiate an amicable solution to EU concerns over alleged trade distortions in the two cases.

The EU executive is preparing a report on the impact of Chinese government support for solar panel manufacturers following a complaint by Germany's Solar World.

That could lead to the imposition of punitive import tariffs if the Commission determines that Chinese panels benefit from state subsidies, allowing them to be sold below cost and pushing out EU firms.

"Provisional duties have to be decided before June 7, and before the end of the year you have a final decision. And that's setting the timeframe (for negotiation)," De Gucht told Reuters. "That's also setting the timeframe for mobile networks."

"It is the Chinese who have requested that we would have negotiations on a possible amicable solution. We have already have contacts, we have already sent people to Beijing, and the Chinese already came to Brussels," he said.

The hi-tech telecoms case is less advanced but potentially far bigger in political and economic impact.

The EU is collecting evidence to prepare a possible case against Chinese network equipment makers Huawei and ZTE over state subsidies, but has not received a formal complaint from European industry.

De Gucht said the Commission had the power to initiate proceedings on its own authority even if no European competitor came forward.

A complaint is the normal starting point for an investigation, but European manufacturers Ericsson, Alcatel-Lucent and Nokia Siemens Networks have remained silent because trade experts say they fear retaliation against their business in China.

Solar panels are the biggest import sector ever targeted by an EU trade investigation, with over $25 billion worth of Chinese panels imported in 2011.

The case over mobile network equipment makers would dwarf that in size. The European telecoms industry accounts for an estimated 4.8 percent of the EU's gross domestic product.

Such self-initiated cases can be awkward for the Commission, as it appears to be both complainant and judge and still needs evidence from EU producers and approval from EU member states, which ultimately vote on Brussels' proposals to impose duties.

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