EU Contests Chinese Restrictions on Lithuanian Trade, High-Tech Patents at WTO

The EU requested two World Trade Organization dispute settlement panels over trade disputes with China, the European Commission announced. One dispute concerns Chinese trade restrictions on Lithuanian exports and EU exports with Lithuanian content. The other deals with the legality of Beijing restricting EU high-tech patent holders from accessing EU courts. The WTO action comes after bilateral talks over the issues fell through, EU Trade Commissioner Valdis Dombrovskis said.

"China is a major trading partner for the EU, which brings clear economic benefits to both sides," Dombrovskis said. "Good partners treat each other with respect and should adhere to fair play. It is therefore our duty to stand up for our rights when China violates global trade rules or subjects an EU Member State to economic coercion, also affecting our single market. Our preference was to solve these two significant and systemic cases in a consultation process and we have invested a considerable amount of time in doing so. However, this was to no avail. We are therefore left with no choice but to request the establishment of these WTO panels."

China's restrictions on Lithuanian imports began in December 2021 and have included rejections of these goods by customs authorities, import restrictions affecting companies that use inputs from Lithuania, and a drop in Chinese exports to Lithuania, the commission said. Further, import bans on alcohol, beef, dairy, logs and peat from Lithuania were imposed under the guise of phytosanitary restrictions. Overall, trade from Lithuania to China this year dropped 80% from January to October compared with that same stretch in 2021, according to Chinese customs figures, the commission said. The EU considers these restrictions to be violations of WTO rules.

In response, China's Ministry of Commerce said China has always managed its trade practices in line with WTO rules while strengthening intellectual property rights. "The Chinese side regrets the European side's decision," the ministry said, according to an unofficial translation. "China will properly handle the relevant request raised by the EU in accordance with the WTO dispute settlement procedures, and resolutely safeguard its legitimate rights and interests."

Under the other panel, the EU is contesting decisions from Chinese courts that, starting in August 2020, prevent companies with high-tech patents from using non-Chinese courts to protect their technologies. The EU said these "anti-suit injunctions" deprive "European high-tech companies of the possibility of exercising and enforcing their patent rights within the EU or at any other court outside China." Brussels is alleging that the measures violate the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights.

The Dispute Settlement Body will hear the panel requests at its Dec. 20 meeting, during which China can oppose the bids. If it does so once, the EU can renew the requests, leading to the establishment of the panels at the Jan. 30 DSB meeting.