The European Union (EU) took China to the World Trade Organisation (WTO) on Thursday over its coercive practices against Lithuania and some exporters from other member states. "These measures are a threat to the integrity of the single market because they affect intra-EU trade and EU supply chains and have a negative impact on EU industry," European Commission Vice-President Valdis Dombrovskis, told Bloomberg in an interview.Mr Dombrovskis said the EU worked hard to gather evidence to document China's restrictive measures against European products, because the actions were conducted informally and many European companies were reluctant to cooperate because they fear retaliation from Beijing.
China, the EU's main trade partner, started blocking Lithuanian products - and some other European goods that contained Lithuanian components - at customs last December, after Taiwan opened a representative office in Vilnius under the country's name instead of the capital, Taipei. Beijing considered the move a challenge to its sovereignty. The diplomatic standoff escalated after China recalled its ambassador and downgraded ties with Lithuania.
Meanwhile, the Lithuanian government has rejected any change to the name of the representative office. China has denied that it's blocking Lithuanian exports. The EU said in a press release that it has evidence of pressure on European companies operating in other members states to remove Lithuanian inputs from their supply chains when exporting to China.
The EU's move Thursday is largely symbolic because it will take several years for the case to work its way through the WTO's backlogged dispute-settlement system. Even if the EU wins an initial ruling, China could essentially veto it by appealing to the WTO's inoperable appellate body.
The case could present the first major test for an EU-crafted dispute-settlement mechanism - known as the multi-party interim appeals arrangement - of which China and the EU are both members.Once the EU launches the case, China has 60 days to enter into consultations with the bloc. If that doesn't resolve the issue, Brussels can request the establishment of a WTO panel.
Those proceedings normally last more than the maximum stipulated period of nine months.The Lithuanian Confederation Industrialists, the country's largest business association, said some 130 companies are unable to send products to China or to clear shipments through customs. The economic value of the containers blocked is around 26.5 million euros (S$40.16 million), EU officials said.
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