EU suspends WTO dispute with China over alleged economic coercion of Lithuania

“This is a procedural step taken for technical reasons related to the need to assess certain elements arising from the preparation of written submissions,” said EU trade spokesman Olof Gill.

“This suspension is something the EU, as the complainant in this case, can do at any moment in time in the course of WTO proceedings.”

Launching the case in January 2022, Brussels said it had evidence of a refusal to clear Lithuanian goods at customs and a rejection of applications from Lithuania.

The EU also claimed to have evidence of China pressuring companies operating from other member states to remove Lithuanian inputs from their supply chains when exporting to the country.

A note circulated to WTO members on Friday said the EU, which represents 27 member states at the Geneva body, wanted to “immediately suspend its proceedings, in accordance with Article 12.12 of the understanding”.

The suspension has been made for an “indeterminate period of time”, but the bloc has one year to resume the dispute.

The suit was initially based on what Brussels saw as a hard embargo on Lithuanian goods at the end of 2021. However, the blockade gradually became more porous, with small volumes of products gradually gaining entry to Chinese ports.

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China imported US$14.2 million worth of Lithuanian products in December 2023, well short of the US$43.1 million in December 2020, before the dispute began, but a 271 per cent increase against December 2021, when the dispute erupted.

More than US$134 million in Lithuanian goods went to China last year, down 72.4 per cent since the pre-spat total in 2020.

Last November, Foreign Minister Gabrielius Landsbergis said China had lifted its “economic pressure”, and that talks were ongoing to end a feud that saw Beijing expel the Lithuanian ambassador in 2021.

“I must highlight that, following discussions and various diplomatic processes, some of which are still ongoing at the WTO, most of the economic pressure measures against Lithuania have been lifted,” Landsbergis told Lithuanian news agency ELTA.

“What I haven’t made so clear in the past is that Lithuania is no longer under any economic pressure from China,” he added.

Beijing has always publicly denied there was an embargo, telling EU officials that Chinese businesses simply decided not to buy goods from countries that have “attacked China’s sovereignty”.

In November, however, China’s Ambassador to the EU, Fu Cong, made a rare explicit suggestion that Beijing had officially punished Lithuania for its relations with Taiwan.

“This concerns one of the fundamental principles of Chinese foreign policy, which is the one-China policy. So if a country actually harms that basic principle, we will take responsive actions – I think that is understood,” Fu said.

At the root of the dispute, which saw Vilnius emerge as Europe’s most hawkish voice on China, was the “Taiwanese Representative Office”, opened in November 2021.

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The name was a break from the EU norm, whereby the offices usually carry the name “Taipei”. A month later, Lithuania’s exports to China dropped by more than 90 per cent in December compared to a year earlier.

The saga became a major thorn in the side of broader EU-China relations. It helped galvanise support for an anti-coercion instrument, a trade weapon which has now been adopted, and which will allow the European side to respond to future cases of economic strong-arming with tariffs or curbs on market access.

While Brussels publicly defended Lithuania’s right to host the office under the chosen name within the bloc’s one China policy, privately some powerful member states felt Vilnius had picked an unnecessary fight with Beijing.

In a sign that normal diplomatic business between China and Lithuania had not resumed, Landsbergis said on Friday that the Chinese mission in Vilnius had suspended the issuance of visas to Lithuanian citizens as of Wednesday, local media outlet LRT reported.