China, EU close to deal on telecoms trade dispute - sources

Trade rows

Chinese Premier Li Keqiang will meet senior EU officials at a summit in Milan on Oct 16-17 and is expected to discuss the issue. The European Commission declined official comment.

Failure to reach a deal could potentially see the EU executive launching an anti-subsidy procedure imposing punitive levies on Chinese telecoms equipment exports.

Ties between the EU and China have been bedeviled by a series of damaging trade rows ranging from steel and wine to solar panels as China seeks to produce the kind of sophisticated products that compete directly with Europe.

EU officials say De Gucht took on the telecoms issue because Ericsson, Nokia Siemens Networks and Alcatel-Lucent were reluctant to come forward and publicly accuse Beijing of subsidizing Huawei and ZTE, fearing retaliation in China.

The European Union wants greater access to China in industries including telecoms, especially in fourth generation (4G) mobile services.

Going to the World Trade Organization was also deemed to be too slow for the European Commission, which is seeking to defend a sector that is part of wider information and communication technology industry that generated about 5 percent of the European Union's economic output over the past decade.

A successful deal hangs on Beijing agreeing to change its practices on export credits. Major economies abide by rules set down by the Organization for Economic Co?operation and Development that place limits on export credits.

They include minimum interest rates and maximum repayment terms, as well as transparency about the credit process.

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