EU to hold talks with China ahead of WTO case over Lithuania dispute

The European Union is set to hold talks in the coming weeks with China over its alleged breach of global trade rules in a dispute with Lithuania – as the bloc moves forward with the early stages of a World Trade Organization (WTO) case. Beijing agreed to the request for consultation lodged by Brussels at the Geneva body last month, sources said, with talks obliged to kick off within 30 days of its acceptance. “Consultations will be held and the EU is preparing for them,” an EU spokesman said. The EU initiated a suit at the WTO last month, saying it had gathered evidence of numerous trade felonies committed by China against Lithuania, an EU member state. The bitter row ignited when Beijing reacted furiously to Lithuania’s hosting of a “Taiwanese Representative Office” in Vilnius. Typically, such informal embassies for the self-ruled island have been referred to as Taipei representative offices. China recalled its ambassador to Lithuania and downgraded the status of its embassy in Beijing. Lithuanian businesses then reported being frozen out of the Chinese market. In December, Lithuania’s exports to China plunged 91 per cent from a year earlier, according to China’s own customs statistics. In a WTO filing, Brussels said it had evidence of China refusing to clear Lithuanian goods through customs and rejection of import applications from Lithuania. The EU also said it had evidence of Beijing pressuring companies operating from other EU member states to remove Lithuanian inputs from their supply chains when exporting to China. A spokesman in China’s Ministry of Commerce said last month that “China has always managed foreign trade in a manner consistent with WTO rules”. The consultations are to last for 60 days. Should no resolution be found, the EU can request a WTO hearing. EU officials said last month that they hoped to de-escalate the quarrel through diplomatic channels, rather than embark on what could be a lengthy dispute settlement case. Dmitry Grozoubinski, executive director of the Geneva Trade Platform think tank and a former trade negotiator for the Australian government, said that the consultations provide both sides with a chance to defuse the situation. “Option one is [China] tries to argue that what they are doing is, in fact, legal in the hopes the EU will back off for fear of losing an eventual case - probably not a high chance that will work,” he said. EU launches WTO case against China over Lithuania row Alternatively, China could “back down quietly” or the two sides could seek a face-saving compromise without going through the extensive panel process. According to WTO rules, China could have ignored the request for consultation – or not responded “substantively” – as the US did in 2020 when Hong Kong sued it in Geneva over a labelling dispute. The case would have then proceeded to the panel stage without discussions. In Hong Kong’s dispute with the US, Washington also rejected Russia’s attempts to join the consultation as a third party, saying the case did not “concern the marking of goods produced in the Russian Federation, and the Russian Federation’s request to join the consultations does not even seek to explain its claim of substantial trade interest”. As the EU’s trade team prepares for the talks, the United States, Britain and Australia are requesting to join as third parties. “We support our allies, Lithuania & the EU, in standing against China’s use of coercive trading practices,” British Trade Secretary Anne-Marie Trevelyan said on Twitter. “That’s why we will request to join the EU’s WTO consultation into these measures as a third party to ensure we combat economic coercion in trade together.” 🇬🇧🇪🇺🇱🇹 We support our allies, Lithuania & the EU, in standing against China’s use of coercive trading practices. That’s why we will request to join the EU’s @WTO consultation into these measures as a third party to ensure we combat economic coercion in trade together 🛑⚖️ — Anne-Marie Trevelyan (@annietrev) February 7, 2022 Adam Hodge of the Office of the US Trade Representative, said the US would request to join the consultation “to push back on the PRC’s coercive economic and diplomatic behaviour”. Similarly, Australian Trade Minister Dan Tehan said “Australia has a substantial interest in the issues raised in the dispute brought by the European Union against China”. If China concludes that these countries have no substantial trade interest in the dispute, it can refuse the request. Australia seeks to join WTO talks on China-EU trade dispute The third parties could then lodge a separate request for consultations with the WTO, but this would in effect start their own proceedings against China. Should the Lithuania case move to the dispute stage, the countries would not need China’s approval to join as observers. Their participation would mark a continuation of a recent trend in which Western countries have become more critical of China’s practices at the WTO. “It does seem like we are seeing the emergence of a willingness to challenge China publicly on sensitive issues in ways that were not done before,” said Simon Lester of the China Trade Monitor website. “It will be interesting to see how China reacts. Do they quietly back down on Lithuania? Or do they ratchet things up because they don’t want to be seen as backing down?”

EU to hold talks with China ahead of WTO case over Lithuania dispute

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;} China agreed to consultation after European Union filed the request with World Trade Organization last month Talks are opening gambit of a dispute settlement case before the global trade group

China agreed to consultation after European Union filed the request with World Trade Organization last month

Talks are opening gambit of a dispute settlement case before the global trade group