The EU elevates two of its trade fights with China at the WTO

The European Union has asked this Wednesday to create two special arbitration groups in the World Trade Organization (WTO) to resolve disputes with China for measures that it considers discriminatory and contrary to international trade regulations.

Thomas Osborne
Thomas Osborne
07 December 2022 Wednesday 05:43
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The EU elevates two of its trade fights with China at the WTO

The European Union has asked this Wednesday to create two special arbitration groups in the World Trade Organization (WTO) to resolve disputes with China for measures that it considers discriminatory and contrary to international trade regulations.

Specifically, it seeks to focus on the protection of its cutting-edge technology, by harming the claim of European patents for key solutions such as 5G, and the limitations on Lithuanian exports, a member of the EU. "In both cases, the measures are very damaging to European companies," the European Commission said in a statement.

The issues have been on the WTO table since the beginning of the year, when Brussels went to the international organization in January and February to request consultations with China in order to resolve these two issues. The request to open the groups is a first step in a challenge before the WTO. These consultations, which normally last for a year and a half, rarely resolve disputes.

According to Brussels, since August 2020, Chinese courts had issued "injunctions" that prevented European companies from resorting to non-Chinese courts, such as those in the EU, in relation to essential patents.

The community bloc criticizes that patent owners who go to a court outside of China to assert their rights over protected technologies later find themselves with daily fines of up to 130,000 euros imposed by the Asian authorities, which in practice means "putting pressure on them to set licenses below market prices".

The other dispute concerns the reduction of China's diplomatic ties with Lithuania from December 2021 and the pressure exerted on multinationals to break their ties with the Baltic nation, after allowing Taiwan to open an embassy. de facto in Vilnius, its capital.

China also later, and "suddenly," imposed import bans on alcohol, beef, dairy products and materials from Lithuania based on plant and food safety standards without demonstrating that the bans were justified. This has caused an 80% drop in trade between the two countries and has damaged the functioning of the European internal market, it is assured.

The requests come at a time when the European Union is reviewing its stance towards China, which it increasingly sees as a competitor and rival rather than a partner. Russia's invasion of Ukraine has also prompted EU leaders to express concerns about economic dependence on China, which has taken a more neutral stance in the conflict.