The European Union has set its sights on its next target, or should we say targets. It has placed both Huawei and ZTE in its crosshairs and plans on launching an investigation against the companies due to suspicions over unfair subsidies as well as national security issues. Normally, the EU would launch investigations based on complaints from companies, however, this time around, the EU is taking matters into its own hands.
The European Commission believes that Huawei and ZTE may possibly be receiving unfair subsidies that allow it in turn to undercut its European rivals. EU Trade Commissioner Karel De Gucht is taking charge of this operation, and will ultimately be deciding whether or not to go through with the investigation. He will also be investigating whether or not these companies pose a danger to national security. Last February, he told Reuters that “there were ‘serious security concerns’ involving mobile telecom networks,” and noted Huawei in his statement.
The EU tried to seek help from several European manufacturers, including Ericsson, Alcatel-Lucent, and Nokia Siemens. All of the companies refused to offer their help because of the potential risk that follow along. If they were to participate in the investigation, they fear that they would be shut out of the Chinese telecoms market, a growing market that is very important for these businesses.
Along with the lack of support from European manufacturers, several EU countries are divided on the issue as well. Britain and the Netherlands are supportive of Huawei because it is a major job provider in Europe. Other countries are concerned about Huawei gaining more influence in their wireless markets. These countries are mainly concerned about the espionage rumors that have circulated both Huawei and ZTE.
Many countries had concerns that the Chinese government was using Huawei and ZTE devices to spy on other nations. This caused a huge scare amongst many countries. Canada considered banning Huawei devices from its government, the United States launched a provision that placed restrictions on U.S. government agencies from purchasing devices from these businesses, and Germany restricted Huawei from supplying its products for a national academic research network.
Huawei and ZTE have continuously denied that their devices are used to spy on other nations. They also say that they are not receiving unfair subsidies, and the low cost of their products is due to the low-cost of their manufacturing, as well as their own innovation. They say that they have always complied with international laws. Karel De Gucht will discuss the possibility of this investigation with other EU trade minsters at a meeting in Dublin this week.