"The basic problem, is can you use a player for two different national teams during the holiday period?"
Walcott injured his shoulder in a training session before England's friendly win over Germany last November and was out for four months, much to the anger of Wenger.
The winger had scored a hat-trick for the senior side in a World Cup qualifier in Croatia two months earlier.
The Under-21 squad includes Aston Villa striker Gabriel Agbonlahor and Manchester City defender Micah Richards, who have also featured in the senior team.
Pearce said: "I have every confidence in this squad. We are really looking forward to competing with the best under-21 teams in Europe, and hopefully, doing our country proud with our performances. It should be a fantastic tournament."
England Under-21 squad:
Joe Hart (Manchester City), Joe Lewis (Peterborough), Scott Loach (Watford);
Martin Cranie (Portsmouth), Kieran Gibbs (Arsenal), Michael Mancienne (Chelsea), Nedum Onuoha (Manchester City), Micah Richards (Manchester City), Andrew Taylor (Middlesbrough), Richard Stearman (Wolves), James Tomkins (West Ham);
Lee Cattermole (Wigan), Andrew Driver (Hearts), Craig Gardner (Aston Villa), Adam Johnson (Middlesbrough), James Milner (Aston Villa), Fabrice Muamba (Bolton), Mark Noble (West Ham), Jack Rodwell (Everton), Danny Rose (Tottenham);
Theo Walcott (Arsenal), Gabriel Agbonlahor (Aston Villa), Frazier Campbell (Manchester United)
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