EU files a WTO case against China for targeting Lithuania

The European Union has enraged China by filing a dispute with the World Trade Organization (WTO) accusing Beijing of targeting Lithuania because of its stance on Taiwan.

The move by Brussels on Thursday marked a further worsening in relations between China and the EU, with a long-awaited investment deal already on the rocks after the two sides traded tit-for-tat sanctions.

The most recent conflict concerns Lithuania, one of the EU’s smallest countries, which made headlines in July by allowing Taiwan to create a diplomatic mission in Vilnius.

Beijing, which does not recognise Taiwan as a state and views the self-governing democratic island as a rebellious region of the mainland, was outraged by the action.

In a statement, EU Trade Commissioner Valdis Dombrovskis said, “Launching a WTO dispute is not a step we take lightly.”

“However, following multiple failed bilateral efforts to resolve the issue, we see no other option but to request WTO dispute settlement discussions with China,” he added.

By taking the matter to the WTO, the EU backed up claims made by Lithuanian business leaders and politicians that the disagreement has resulted in China restricting Lithuanian imports and imposing other economic sanctions.

However, WTO arbitration is a slow-moving procedure, and any outcome may take years. Beijing reacted angrily to the move, describing the “so-called” Chinese coercion against Lithuania as “unfounded and illogical.”

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

“We hope that China will agree to participate in negotiations with the EU and that they will be successful not only in resolving ongoing trade disruptions, but also in guaranteeing long-term sustainable solutions,” Lithuania’s foreign ministry said in a statement on Thursday.The EU claims to have amassed a large amount of evidence of Chinese limitations.

“Refusal to clear Lithuanian goods through customs, rejection of Lithuanian import applications, and pressure on EU enterprises operating out of other EU member states to remove Lithuanian inputs from their supply chains” were among the measures taken.

Despite the evidence, Dombrovskis stated that the EU will continue to seek diplomatic solutions to the dispute, and that he has discussed the issue with his Chinese counterparts in recent weeks.

While China is a “important partner” and “we treasure this relationship,” Dombrovskis told reporters that “our partnership requires reciprocal respect.”

The European Commission is in charge of trade policy for the EU’s 27 member states and leads negotiations at the World Trade Organization in Geneva.