China-Lithuania trade dispute: EU Commission turns WTO on

Status: 01/27/2022 1:23 p.m

According to the EU Commission, China is breaking international trade rules when dealing with Lithuania. Because talks have so far made no progress, the EU has now initiated proceedings at the World Trade Organization.

The European Union has initiated proceedings against China before the World Trade Organization (WTO) over a dispute over discriminatory practices against Lithuania. Repeated attempts to resolve the conflict bilaterally have failed, said the Vice President of the EU Commission, Valdis Dombrovskis. Therefore, there is no other option but to ask the WTO for clarification.

Discriminatory Measures

China has been taking massive action against Lithuania since the beginning of December last year. The EU country was removed from the Chinese customs list, making trade practically impossible. Exports from Lithuania to China have now fallen by more than 90 percent. The areas of pharmaceutical products, lasers, electrical appliances and food are particularly affected.

Dombrovskis clearly considers the measures illegal and discriminatory. “Chinese companies are canceling their orders, Beijing is holding back exports to the EU country and is threatening international corporations with import restrictions if they use components made in Lithuania.” According to the EU Commission, Beijing is breaking international trade rules. “Initiating WTO proceedings is not a step we take lightly,” Dombrovskis said.

Continued diplomatic efforts

The EU is determined to act as one and to take swift action against measures that violate WTO rules and threaten the integrity of the European single market. “At the same time, we are continuing our diplomatic efforts to de-escalate the situation,” the statement said. “The measures disrupt intra-European supply chains and they are also a burden on Europe’s industry,” said Dombrovskis.

Background to the dispute: The Lithuanian government had allowed Taiwan to open its own representation. However, China regards Taiwan as a breakaway province and wants to isolate the island state internationally. Most recently, Beijing expelled the Lithuanian ambassador and withdrew its own representative from Vilnius.

China rejects EU allegations

China has rejected accusations from the European Union that Beijing wants to punish the Baltic country with discriminatory trade practices. The allegations are “unfounded and contradict the facts,” said Zhao Lijian, a spokesman for the Beijing Foreign Ministry. It is a purely political and not an economic dispute, continued Zhao, who also spoke of a “bilateral matter” between China and Lithuania.

“We hope the EU will discern right from wrong and remain vigilant against Lithuania’s attempt to hold China-EU relations hostage,” Zhao said. Lithuania should get back on the “right path” and stick to the one-China principle, according to which Taiwan and China belong together.

60 days time

The first stage of the procedure under the WTO arbitration rules involves a request for consultations, under which the EU will formally request further information from China in order to settle the dispute amicably. If no results are achieved within 60 days, the EU can ask the WTO to rule on the dispute.

With information from Stephan Ueberbach, ARD studio in Brussels

Trade dispute between Lithuania and China: EU turns on World Trade Organization

Stephan Ueberbach, ARD Brussels, 27.1.2022 12:46 p.m

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