By Philip Blenkinsop
DUBLIN (Reuters) - A growing number of EU countries do not want the European Commission to launch an investigation into Chinese telecoms equipment makers Huawei and ZTE, Sweden said on Thursday.
The European Commission, the EU's executive body, has been collecting evidence to prepare a possible case against the two companies over alleged state subsidies that would allow them to undercut European competitors.
EU trade investigations normally begin with a company complaint, but manufacturers Ericsson, Alcatel-Lucent and Nokia Siemens have not lodged one.
Trade sources say they do not wish to do so because of fear of being shut out of the growing Chinese telecom equipment market in retaliation, rather than because they do not believe Chinese companies are benefiting from subsidies.
EU Trade Commissioner Karel De Gucht told a news conference in Dublin he had brought the topic up at a meeting of EU trade ministers on Thursday. He declined to elaborate or say when the Commission might decide on any possible investigation.
Swedish Trade Minister Ewa Bjorling told Reuters that a majority of her counterparts indicated that they did not support the launch of an investigation.
"Not all member states spoke out, but of those that spoke, a majority was for our position," she said.
One trade diplomat close to the discussions said only four member states out of the 27 spoke in favor of an investigation, and did not include Germany, the EU's biggest economy.
While it is for the Commission to decide whether it wishes to launch such an investigation, EU countries decide whether or not to impose punitive duties for subsidies or dumping.
The Commission is investigating 30 dumping and subsidy cases, 19 of them involving China. Last year it launched its largest investigation to date, into the alleged dumping of, and subsidies for, an annual 21 billion euros ($27 billion) of solar panels and components that China exports to the EU.
The European Union is China's biggest trading partner, while for the EU, China is second only to the United States and the friction risks sparking a trade war.
An internal EU report last year recommended that the EU should take action against Chinese telecom equipment makers as their increasing dominance of mobile networks made them a threat to security as well as to homegrown companies.
Huawei has denied that it has received unfair subsidies and that its advantages are due to low-cost manufacturing and innovation. It says it complies with international laws and maintains that is products are secure.
China's ambassador to the EU, Wu Hailong, said earlier on Thursday in Brussels that the rising trade frictions between China and EU were worrisome.
"The EU side has been frequently resorting to trade remedy measures to restrict access of Chinese products to the EU market," he said. "The negative practice is counterproductive to the sound, sustained and stable development of China-EU trade relations."
(Additional reporting by Ethan Bilby in Brussels; editing by Ron Askew)