China's top machinery and electronic products chamber said on Monday it is concerned that the fresh European Union (EU) investigation into Chinese-made wireless modems represents a new wave of trade protectionism.

The latest anti-subsidy probe was launched on Thursday and comes after the EU launched anti-dumping and safeguard probes into wireless wide area networking (WWAN) modems - devices that allow links to wireless networks - in late June.

"It is rare for any nation to launch anti-dumping, anti-subsidy and safeguard charges on a single product at the same time. We believe it is a sign of trade protectionism," said Wang Guiqing, deputy head of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products.

He said the chamber, which represents domestic modem makers, will closely monitor the case and ensure that the investigations are in line with World Trade Organization (WTO) rules.

The three EU investigations into Chinese-made WWAN modems follow complaints by Option, a Belgium-based wireless technology company that makes USB drives and wireless routers for laptops, claiming the sharp increase of "subsidized imports" into the European market has caused "severe injury" to the company.

However, Wang said Option lacks the credentials to make these charges, as it had outsourced all of its WWAN modem production to China in 2008 and is not a manufacturer. According to WTO rules only manufacturers can file such charges.

If domestic wireless modem manufacturers are denied market entry, Option would benefit, Wang said. However, European consumers and telecom operators stand to lose a lot as manufacturers like ZTE and Huawei provide products with better quality and lower prices.

Huawei and ZTE are the two major WWAN modem makers in China, with Huawei alone accounting for more than 50 percent of the European market. Both the companies said on Monday that Option's charges are baseless.

"We believe Option's complaints are groundless and object to any accusations of dumping or illegal subsidies," said Zhang Wuxiao, legal representative of Huawei. The company's success is based on a high level of product innovation and ability to predict the take-off of the 3G market in Europe," Zhang said.

Guo Jianjun, legal director of ZTE, said: "Option's failure in the modem business has been due to high operating costs and sluggish reaction to the changing market. It has not been caused by Chinese exporters."

Option officials were not immediately available for comment.

According to a report in Newsweek, Europe has overtaken the United States as China's major trade partner. The nation's trade with the EU soared to $306billion by July this year, compared to $243billion with the US.

"The EU investigations will disrupt normal trade and hurt the interests of (EU) consumers. The move also runs counter to the deepening China-EU friendship," Yao Jian, spokesman of the Ministry of Commerce, said last week.

(China Daily September 21, 2010)