The European Union is opening a new front in the fight with China over the supply of next-generation telecommunications equipment for the bloc — moving from the security realm to trade.

To date, the EU has used security grounds to grapple with the question of whether Huawei and other Chinese telecom companies should be restricted from deploying 5G networks across the 27-nation bloc.

In a step late last month that was as quiet as the security debate has been loud, the European Commission began an investigation into whether Chinese exporters of core broadband gear for future 5G networks should face EU tariffs to counter alleged unfair price undercutting known as dumping.

The EU probe of optical-fiber cables imported from China stems from the first-ever dumping complaint by Europacable, an association that represents European producers including Prysmian, Nexans and Leoni.

$1.2 Billion Market

The manufacturers in this corner of the industry are much less well known than their customers, which are service providers such as Deutsche Telekom, Orange and Proximus.

The EU market for optical-fiber cables is worth about 1 billion euros ($1.2 billion) a year and is poised to grow as the bloc pushes ahead with a digital-infrastructure investment program, according to Volker Wendt, a spokesman for Europacable.

With roughly 1.2 million kilometers (746,000 miles) of optical-fiber cables sold in the EU annually, European producers are alarmed by a 150% jump in imports from China between 2016 and 2019, said Wendt. Chinese producers now have a combined 15% share of the bloc’s market, he said.

“We have been observing the EU import trends for quite some time and filing the dumping complaint is a big step for us,” Wendt said by phone. “Our aim is to restore a level playing field to ensure continued investments of European producers in this high-end technology segment.”

The Brussels-based commission, the EU’s trade authority, has eight months to decide whether to impose provisional anti-dumping duties against Chinese exporters and 14 months to decide whether to apply “definitive” levies, which usually last for five years.

Source: Bloomberg