EU takes China to WTO over Lithuania trade dispute

BRUSSELS — The European Union announced today that it has begun legal action at the World Trade Organization against China over what it says are import restrictions Beijing has imposed on Lithuania.

The European Commission estimates that China cut trade from the EU member country by 80% this year after Lithuania broke with diplomatic custom in 2021 by allowing a Taiwanese office in Vilnius to bear the name Taiwan, instead of Chinese Taipei, which most other countries use to avoid offending Beijing.

China considers Taiwan to be part of its territory with no right to diplomatic recognition, and Lithuania’s move infuriated Beijing, which withdrew its ambassador to Vilnius and expelled the Lithuanian ambassador to Beijing. The Baltic state has since closed its embassy in Beijing.

The commission, which handles trade on behalf of the EU’s 27 member countries, said it is taking WTO action because “China has applied discriminatory and coercive measures against exports from Lithuania and against exports of EU products containing Lithuanian content.”

China said it regrets the EU move, which also includes a second dispute about European companies’ rights over their high-tech patents.

“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 favorable environment for innovation and business operations,” the Ministry of Commerce said in a statement.

The EU’s executive branch, however, said Chinese customs authorities have rejected a number of Lithuanian imports and had “suddenly formalized complete import bans on alcohol, beef, dairy, logs, and peat shipped from Lithuania.” It said Beijing has used food and animal health reasons for doing so.

Prior to this year, Lithuania exported around 200 million euros ($210 million) worth of produce to China annually.

The commission is particularly concerned about the impact on the entire European market because China’s measures might discourage companies from doing business with Lithuania to avoid having restrictions placed on their own products.

Dissatisfied with Beijing’s response to its questions, the commission has requested the establishment of a WTO panel to hear the dispute. It expects its request to be heard on Dec. 20 or in late January. It could take a year before any decision is handed down from the governing body for world trade.

Brussels also requested a second WTO panel over another dispute with China. It concerns the legality of Beijing restricting EU companies that hold high-tech patents from accessing European courts to protect and enforce their rights.

“The Chinese side regrets the European side’s decision,” the Ministry of Commerce said. “China will properly handle the relevant request raised by the EU in accordance with the WTO dispute settlement procedures, and resolutely safeguard its legitimate rights and interests.”