BERLIN (Reuters) - German Chancellor Angela Merkel and the powerful BDI industry association distanced themselves on Thursday from the U.S. government's decision to put Chinese telecom equipment giant Huawei Technologies on a blacklist. China has slammed the U.S. move and threatened to take its own steps to protect its companies, in a further test of ties as the economic heavyweights clash over trade. "Europe needs to maintain its own course," the BDI said, adding that the European Union would decide independently which companies it would allow to build 5G network infrastructure. "Europe must not be dragged into the trade dispute between China and the United States," it added. Merkel, asked during a news conference about the U.S. decision on Huawei, said Germany would stick to its position that companies bidding in the country's 5G auction must meet criteria set by the government. Germany in March set tough rules for vendors supplying telecoms network equipment, but stopped short of singling out Huawei for special treatment due to concerns over its ties to the Chinese government. The BDI urged the German government and the European Commission, the EU's executive body, to stick to the planned auction procedure and quickly agree joint security standards. "German industry quickly needs legal and planning certainty in 5G expansion," the BDI said. It called for Europe-wide coordination on security specifications, which would be independent of equipment manufacturers. (Reporting by Michael Nienaber; Editing by Kirsten Donovan)