EU escalates trade rows with China over Lithuania restrictions, patents

The European Union has escalated disputes with China to the World Trade Organization, requesting panels be assembled to hear two cases – one over trade restrictions on Lithuania and the other on legal recourses for EU patent holders.

Chinese police officers watch a cargo ship arrive at a port in Qingdao, in China's eastern Shandong province. © AFP

"In both cases, the Chinese measures are highly damaging to European businesses," the European Commission said in a statement on Wednesday.

In the Lithuanian case, they even "impact the functioning of the EU internal market", it stated.

China is the European Union's biggest trading partner, and the litigation burdens the World Trade Organization with a thorny challenge at a time when its dispute settlement system is badly weakened.

The Lithuania case is over trade restrictions China has been applying to that EU member country because of Lithuania's strengthening ties with Taiwan, which China views as part of its territory.

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Beijing has denied taking coercive measures against Lithuania.

But Lithuanian exports to China have dropped 80 percent over the past year, ever since Chinese authorities started rejecting many Lithuanian imports.

The commission said that China's claims in February that bans on Lithuanian alcohol, beef, dairy products, logs, peat and wheat were on health grounds were not justified.

Breaking: EU to push to panel stage of WTO cases vs China.

1. Over economic coercion of Lithuania following opening of Taiwan rep office in Vilnius
2. For penalising EU firms seeking to protect their patents from Chinese theft in foreign courtshttps://t.co/kvRpg78IPa

— Finbarr Bermingham (@fbermingham) December 7, 2022

On the patents matter, the European Union is challenging decisions made by Chinese courts in August 2020 that barred EU owners of high-tech patents from turning to EU courts to protect their intellectual property.

The commission accused Chinese manufacturers of seeking to score cheaper access to European technology.

'Litigation stage' 

An EU official, briefing journalists on condition of anonymity, said: "By requesting a panel, we're essentially taking these two cases to the litigation stage."

"One of the reasons that we're taking this course of action is because we see that they [Chinese authorities] take their WTO obligations seriously and we see that they have a good record of compliance," he added.

The WTO's dispute settlement body will discuss the EU's request for the panels on 20 December.

China can oppose it, but the EU can then renew its request, and the panels would then be established on 30 January next year.

The commission said the panels' deliberations could last up to a year and a half. 

The World Trade Organization (WTO) headquarters in Geneva, Switzerland. REUTERS - DENIS BALIBOUSE

A WTO panel is the first port of call for countries seeking to resolve a dispute.

But the settlement system is in a fragile state after the United States, under then president Donald Trump, blocked the appointment of new judges to the body's appeals tribunal in 2019.

Current US President Joe Biden has not lifted the block, insisting that the WTO must reform to be more efficient.

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(With AFP)