EU Launches WTO case against China
The European Union has today launched a case at the World Trade Organization (WTO) against China, over what the EU refers to as ‘discriminatory trade practices against Lithuania, which are also hitting other exports from the EU’s Single Market.’
According to the EU Commission, actions being taken by China appear to be discriminatory and illegal under WTO rules and are harming exporters both in Lithuania and elsewhere in the EU, as they also target products with Lithuanian content exported from other EU countries.
Since December last year, and without informing the EU or Lithuanian authorities, China began to heavily restrict or de facto block imports from and exports to Lithuania or linked to Lithuania. A statement from the EU Commission outlines how over the past weeks, it has built up evidence of various types of Chinese restrictions. These include a refusal to clear Lithuanian goods through customs, rejection of import applications from Lithuania, and pressuring EU companies operating out of other EU Member States to remove Lithuanian inputs from their supply chains when exporting to China.
The trade sanctions are as a result of a dispute over Taiwan and followed the opening of a Taiwan representative office in Vilinius. China considers Taiwan as part of its territory and imposes sanctions on countries who recognise it in a formal manner. According to the Financial Times, Lithuanian exports to China fell by 91% in December 2021 compared to the same period the previous year.
According to the EU Commission it has repeatedly raised the matter with the Chinese authorities but attempts to resolve the issue bilaterally have failed. As a result, it has resorted to initiating the dispute settlement proceedings.
The first stage under WTO dispute settlement procedures is the ‘request for consultations’, under which the EU formally asks China for more information on its measures with a view to reaching a satisfactory solution. Should these consultations not lead to a positive outcome within 60 days, the EU may request the establishment of a panel to rule on the matter.
Commenting on the situation, Executive Vice-President and Commissioner for Trade, Valdis Dombrovskis, said, “Launching a WTO case is not a step we take lightly. However, after repeated failed attempts to resolve the issue bilaterally, we see no other way forward than to request WTO dispute settlement consultations with China. The EU is determined to act as one and act fast against measures in breach of WTO rules, which threaten the integrity of our Single Market. We are in parallel pursuing our diplomatic efforts to deescalate the situation.”
The statement outlined that to deal with such cases in future, the Commission is strengthening its toolbox of autonomous measures. Last month, the Commission adopted a proposal for an Anti-Coercion Instrument, which would give the EU more possibilities to react in the event of economic coercion. The proposal is currently being considered by the European Parliament and the Council of the EU.