EU: refers China to WTO following trade restrictions on Lithuania

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BRUSSELS, Jan 27 (Reuters) – EU authorities launched a challenge at the World Trade Organization (WTO) on Thursday, accusing China of discriminatory trade practices against Lithuania that they say threaten the integrity of the bloc’s single market.

China has downgraded diplomatic ties with Lithuania and pressured multinationals to sever links with the Baltic state after it allowed Taiwan to open a de-facto embassy in Vilnius.

China, which said the dispute was political rather than economic and labelled Lithuania’s actions an attempt to “hijack” EU-Beijing relations, regards self-governed Taiwan as its own territory.

The European Commission, which oversees European Union trade policy, said in a statement that China’s actions were harming exporters in Lithuania and elsewhere in the bloc.

The curbs include a refusal to clear Lithuanian goods through customs, rejection of import applications from Lithuania and pressure on EU companies to remove Lithuanian content from supply chains when exporting to China, the Commission said.

It said those actions appeared illegal under WTO rules and that attempts to resolve them bilaterally had failed.

“The EU is determined to act as one and act fast against measures … which threaten the integrity of our single market,” EU Trade Commissioner Valdis Dombrovskis said. Diplomatic efforts were also being pursued, he added.

WTO challenges start with a formal 60-day period of consultations between the parties. If they do not resolve the dispute, the EU can request that a WTO panel rule on the matter. The WTO typically take years to resolve disputes.

In Beijing, the foreign ministry said China acted in accordance with WTO rules and its issue with Lithuania was political.

“We remind the EU to … be wary of Lithuania’s attempt to hijack China-EU relations,” ministry spokesman Zhao Lijian told a news briefing.

Lithuanian officials are discussing whether to ask their Taiwanese counterparts to modify the Chinese translation of the name of Taiwan’s Representative Office, two sources told Reuters on Tuesday .

Taiwan said it had not received a request to change the name. (Reporting by Philip Blenkinsop and Sudip Kar-Gupta; Additional reporting by Yew Lun Tian in Beijing; editing by John Stonestreet)

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