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28th Jan 2023

EU takes legal action against China over Lithuania

  • EU Commission vice-president Valdis Dombrovskis said 'China violates global trade rules' and 'subjects an EU member state to economic coercion' (Photo: European Commission)
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The EU on Wednesday (7 December) said it has launched legal proceedings against China at the World Trade Organization (WTO) for alleged restrictions imposed by Beijing on Lithuania's exports.

The EU Commission estimates that China cut trade from the Baltic country by 80 percent this year after Vilnius broke diplomatic custom last December and allowed a Taiwanese office in Lithuania to bear the name Taiwan.

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Most countries use the term Chinese Taipei to avoid offending China, which considers Taiwan to be a part of its territory.

After Lithuania's move, China withdrew its ambassador to Vilnius and expelled the Lithuanian ambassador. Vilnius in response has closed its Beijing embassy.

The commission now said it was turning to the WTO and asking it to establish a panel that will resolve the dispute.

"China has applied discriminatory and coercive measures against exports from Lithuania and against exports of EU products containing Lithuanian content," the commission said in a statement.

"Good partners treat each other with respect and should adhere to fair play," EU Commission vice-president Valdis Dombrovskis said on Wednesday.

"It is therefore our duty to stand up for our rights when China violates global trade rules or subjects an EU member state to economic coercion, also affecting our single market," he added.

The EU executive has asked for explanations from Beijing, but it said on Wednesday that "China failed to prove that these bans were justified".

The commission, which represents EU countries in trade affairs, also has a second dispute with China.

That issue concerns the European companies' rights over their high-tech patents, and it has asked for a WTO decision — even though the WTO's highest forum for resolving disputes is currently not functional.

Here, the commission argues that Chinese courts are not protecting the intellectual property of high-tech patent holders, as Beijing is preventing these companies from protecting their technologies in non-Chinese courts.

China said it regrets the EU move on the two issues.

"China has always managed foreign trade in a manner consistent with WTO rules, continued to strengthen the protection of intellectual property rights, and strived to create a favourable environment for innovation and business operations," the Chinese commerce ministry said in a statement.

However, the commission said that Chinese customs authorities have rejected a number of Lithuanian imports, and had "suddenly formalised complete import bans on alcohol, beef, dairy, logs, and peat shipped from Lithuania."

Lithuania exported around €200m worth of produce to China annually before this year.

The EU executive is worried that China's move will discourage companies from doing business with Lithuania, to avoid becoming a target for Chinese restrictions.

The commission now expects the dispute to be heard by the WTO on 20 December or late January, and it would take a year for the organisation to reach a decision.

The EU has increasingly been viewing China as a systemic rival.

Russia's invasion of Ukraine has also led EU leaders to express concern about too much economic reliance on China.

Opinion

Time to stop China's economic hostage-taking of Lithuania

Simply opening the Taiwanese Representative Office in Lithuania's capital, Vilnius, sparked a large-scale expansion of China's economic warfare against democracies. China's actions amount to a fundamental attack on the DNA of the European Union: the internal market.

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