European Union officials are engaging a new path in the World Trade Organization to address disputes with China. After weeks of dialogue without the desired breakthroughs, the European Commission has formally requested WTO panels to examine two matters that had remained in dispute. The first concerns China’s months-long restrictions on Lithuania, tied to Lithuania’s ties with Taiwan, and the second centers on the protection of European technological patents. [Source: European Commission]
Officials explained that attempts to resolve these systemic differences through consultations had not produced results. A formal panel process was now pursued to ensure a structured, rules-based resolution. The vice president of the European Commission stressed that while China remains a major trading partner bringing tangible benefits to both sides, Europe has reached a point where its commitment to fair competition and equal conditions must be defended. The emphasis was on safeguarding EU internal market rights whenever a partner uses measures that undermine those rights. [Source: European Commission]
Brussels argued that Beijing’s discriminatory steps against Lithuania disrupt intra-EU trade and disrupt supply chains, affecting how the EU internal market functions. From the EU perspective, removing these measures is in the strategic and economic interest of the bloc, which has seen Lithuanian trade fall sharply since December 2021 when China began enforcing restrictions. Since then, authorities in China have enacted discriminatory and coercive measures affecting exports from Lithuania and imports of EU products containing Lithuanian components. [Source: European Commission]
Reportedly, Chinese customs have refused to import Lithuanian goods, restrictions have impacted multinational firms relying on Lithuanian components, and Chinese exports to Lithuania have diminished. In addition, China invoked phytosanitary grounds to ban shipments of Lithuanian alcohol, beef, dairy products, firewood, and peat. When clarifications were requested, Beijing reportedly could not justify these bans. This dispute is tied to Lithuania’s opening of a diplomatic office in Taiwan, a region Beijing claims as its own. [Source: European Commission]
Technological patents
The second focal point concerns high-tech patents. Since August 2020, Chinese courts have issued rulings that restrict companies holding high-technology patents from seeking remedies outside of China to protect those patents there, particularly in critical areas such as 5G technologies. The European Commission has said that this policy unnecessarily limits the ability of European firms to defend their intellectual property rights. It contends that European courts should decide matters related to EU patents, arguing that China’s practice effectively denies European high-tech companies the opportunity to enforce their rights within the EU or even in courts beyond China. [Source: European Commission]
Beijing’s injunctions come with steep penalties, including fines of up to 130,000 euros per day in some cases, according to EU officials. The EU views these actions as a violation of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and accuses China of unilaterally creating rules that favor its own firms at the expense of the multilateral system. The Commission indicated that the EU would raise these concerns at the next WTO meeting and would press for a clear panel to adjudicate the patent issues if China objects to the panel’s creation. [Source: European Commission]