EU may involve WTO to resolve China-Lithuania trade row, Commission says

German car parts manufacturer Continental is pressured by the Chinese government not to import goods from Lithuania. [Paul2015 (shutterstock 1575190462)]

The European Union may take the trade row between China and Lithuania to the World Trade Organisation (WTO) if it finds evidence that Beijing is violating international trade rules, the European Commission said on Friday (17 December). However, a process at the WTO might take too long to make a difference for Lithuania.

The row between the Chinese government and Lithuania has started affecting other EU member states.

The Chinese government is pressuring German car parts giant Continental to stop using components made in Lithuania amid a dispute between Beijing and the Baltic state over the status of Taiwan.

The Chinese government, which views self-ruled Taiwan as its territory, downgraded diplomatic ties with Lithuania last month after the opening of a representative office by Taiwan in Vilnius.

China’s foreign ministry denies that Beijing has pressured multinational companies not to use Lithuanian-produced parts though says its companies no longer trusted Lithuania.

China stops Lithuanian goods at customs, Commission ‘collects information’

China has banned Lithuanian products from entering the Chinese market amid growing tensions, according to Lithuanian media on Thursday (2 December). The European Commission said it is still gathering information and will return to the matter later.

The European Commission said it was gathering information to find out what is actually happening and would then decide on any further actions.

“We’re exploring steps at the WTO and an official complaint to the WTO. Of course, many other steps are theoretically possible,” a spokesperson for the European Commission told reporters in Brussels.

“In order to build a case in the WTO, we need to have enough evidence, so that’s actually what we do now,” another spokesperson said, adding the Commission was in touch with the authorities in Lithuania and other member states that could be facing similar problems.

However, the dispute settlement mechanism at the WTO has been dysfunctional for years, and even if it was functional, a process at the WTO could take years to be resolved.

This is why the Commission proposed an anti-coercion tool on 8 December. If implemented, the tool would allow the Commission to react to coercion efforts from third countries much faster than it can at the moment.

Currently, the EU can only act in foreign affairs on the basis of the consensus of all member state governments. The anti-coercion tool would enable the Commission to swiftly take countermeasures to coercive trade practices without needing the consensus of all member state governments, which should deter third countries from coercive practices in the first place.

For Lithuania and the German company Continental, the Commission’s proposal arrives late. It first needs to be discussed and approved by a majority of member states governments and by the European Parliament.

With geopolitics in mind, EU Commission presents new tool to deter trade wars

The European Commission proposed a powerful new trade instrument on Wednesday (8 December) that would give it more power to impose sanctions on third countries.

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