The World Trade Organization should decide on the cases.
(Photo: imago images/Andreas Haas)
Brussels In the dispute over China’s trade restrictions against Lithuania, the EU now wants to bring about a decision by the World Trade Organization (WTO). In Geneva, the EU Commission demanded the establishment of an arbitration tribunal, which is tantamount to a lawsuit against China.
Lithuania and China are locked in a diplomatic row over the Baltic country’s relations with Taiwan. The island nation opened a liaison office in Lithuania last year with “Taiwan” in its name. China does not recognize Taiwan as an independent state and opposes other countries even using the country’s name.
Analysts in the EU and the US expect China to prepare for a violent conquest of democratically ruled Taiwan. The year 2027 is always being discussed.
In the dispute with Lithuania, China had significantly restricted trade with the country. Lithuanian goods were rejected by customs and containers did not enter the country. Technical problems were sometimes cited for this. China later formally banned imports of many foods from Lithuania, citing alleged health concerns.
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Trade between Lithuania and China has since fallen by 80 percent, according to Chinese statistics. That there are reasons other than trade restrictions can be practically ruled out, said a senior EU official. Arbitrary restrictions on trade are prohibited under WTO law.
The EU sees the entire internal market affected by China’s blockade
The EU sees not only Lithuania affected, but the entire internal market. China’s discriminatory measures affected intra-EU trade and supply chains, the Commission said. Because China also rejects products in which only individual parts come from Lithuania.
German companies also felt restricted and even put pressure on Lithuania to give in to China’s demands. Lithuania, on the other hand, went further and opened the same liaison office in Taiwan. The countries want to work closely together in chip production.
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The previous consultation phase before the WTO did not result in an agreement between China and the EU. A WTO body will now deal with the lawsuit on December 20 and will probably appoint an arbitration tribunal on January 30. They have up to 18 months to make a decision.
The result could be that China will withdraw its trade restrictions – China normally respects WTO rulings, the senior EU official said. If it doesn’t, the EU court could allow punitive tariffs on Chinese products.
China puts pressure on European patent holders
The same timeline applies to the second case brought by the EU against China. This involves patents from European companies that are used by Chinese companies. If the companies try to sue for their rights outside of China, they would be fined up to 130,000 euros per day in China with an injunction.
It is primarily about mobile phone technology, such as patents from Ericsson and Nokia, which Chinese cell phone manufacturers use. According to Brussels, if European patent holders sued Chinese licensees in European courts, they would be punished in China.
The dispute also involves patents from European mobile phone companies.
(Photo: imago images/Michael Gstettenbauer)
According to the EU Commission, Chinese courts have been taking action against international companies in this way since August 2020. In addition to European companies, for example, Indian companies are also affected, said the EU official. He expects other countries to join the lawsuit.
Even if the penalties are pronounced by the courts, they are clearly to be recognized as government measures. The aim is for patent disputes to be negotiated in China and not in other countries. The danger is that investments in research and development pay off less if the Chinese judiciary decides against the patent holders.
Disputes of this kind have never existed before, the EU official said. But China is now using different methods than before. “We didn’t have these types of cases ten years ago,” he said. “They are a reaction to the world we now face.”
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