EU files a WTO case against China for targeting Lithuania

January 28, 2022

EU files a WTO case against China for targeting Lithuania

The European Union (EU) angered China on January 27, 2022, by launching a case against Beijing at the World Trade Organization WTO for targeting Lithuania over its stance on Taiwan.

The European Union informed that the actions of Beijing seemed to be “discriminatory” and “illegal” under the rules of the World Trade Organization.

The move from Europe comes shortly after China imposed trade restrictions on Lithuania.

China retorted that the EU should “distinguish right from wrong.” It said Brussels should get Lithuania to stick to diplomatic relations based on the “One-China” principle at the expense of Taiwan, which Beijing considers part of its territory.

Lithuania-China ties

Tensions between China and Lithuania escalated after Taiwan and Vilnius set up diplomatic offices in each other’s countries, which triggered an angry response from Beijing.

The move prompted China to downgrade its relations with Baltic country as China considers Taiwan as part of its own territory.

As Lithuania started strengthening diplomatic ties with Taiwan, China reportedly started blocking imports of Lithuanian goods in December.

Two German companies in the auto industry had parts stopped at Chinese ports as they were manufactured in Lithuania.

Trade impact

The measures have resulted in a 91 percent drop in Chinese imports from Lithuania based on figures in December 2020 and December 2021. The most frequent issue reported is from a technical point where an error message appears during the administrative process.

In other cases, Chinese import and export companies have simply canceled orders to Lithuanian vendors.

‘So-called’ coercion

Beijing responded bitterly to the move, calling accusations of the “so-called” Chinese coercion “groundless and inconsistent”.

“The issue between China and Lithuania is a political one, not an economic one,” said Chinese foreign ministry spokesman Zhao Lijian.

Reports have said firms in Germany, Sweden, and Finland have been pressured to cut off Lithuania from their supply chains.

Chinese officials tell their European counterparts that the problems- although exclusively linked to Lithuanian goods- are a result of “technical glitches”.

Is this the political weaponisation of trade?

“This is similar to the decision with Australia in 2020 when stuck its neck out about transparency over Covid-19, and then bang they started the same- banning Australian wine, etc.” Pascal Lamy, Former WTO director-general, told Euronews.

This was a trade measure decided by China but there is no trade ground to it, it is the political weaponization of trade”. she added.

EU finds evidence

The EU said that it had built up a trove of evidence of Chinese restrictions.

These include “a refusal to clear Lithuanian goods through customs and rejection of import applications from Lithuania”.

Despite the evidence, Dombrovskis said the bloc would continue to pursue diplomatic solutions to the feud and has raised the problem with his Chinese counterparts in recent weeks.

Bottom-line

Spurred by the latest controversy, the EU is discussing a draft regulation that would equip Brussels with new powers to swiftly retaliate against efforts by foreign governments to undermine the European economy and businesses.

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