Trade: Tensions rise between Europe and China

The tension is rising. Committed to multilateralism, the European Union intends to request the creation of two special groups within the World Trade Organization (WTO) to resolve two trade disputes with China.

“We would prefer to solve these two cases […] through a consultation process and we have spent considerable time trying to achieve this but to no avail. Therefore, we have no choice but to ask for the establishment of these special groups of the WTO,” European Commissioner Valdis Dombrovskis said in a press release.

Beijing’s Forced Experiences

The first dossier concerns Beijing’s coercive practices that prevent European patent holding companies from exercising their rights to protect their innovations. Since August 2020, Chinese courts have been issuing “anti-suit injunctions” to prevent companies from suing in European courts, for example to resolve a dispute with a Chinese licensee under the threat of fines of up to €130,000 per day. .

#Trade #Demon #Hot News | @Trade_EU It asks to create 2 panels @WTO_en against China

The EU defends its interests in the face of China’s bullying and thereby reminds it
China cannot continue to be illegal

Rules exist and must be followed ⤵️ pic.twitter.com/zBprtsxS9I

– MariePierre.VEDRENNE (@MariePierreV) December 7, 2022

Related telecommunications groups

“We consider this practice harmful to the growth of innovation in Europe, and it deprives European high-tech companies of realizing and enforcing their patent rights, which gives them a technological advantage,” Valdis Dombrovskis protested. For Brussels, Beijing is violating the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). For example, in the field of mobile telecommunications, European companies own 3G, 4G and 5G licenses worth billions of euros.

Lithuania was excluded

The second dispute concerns China’s restrictions on the exports of Lithuania, a member of the Union. The latter angered Beijing last year by admitting that Taiwan had opened a trade mission in the country. China then imposed enforcement measures against exports from Lithuania and other EU products containing Lithuanian components. For example, China blocked the customs clearance of certain products.

It also suddenly banned imports of alcohol, beef, dairy products, logs and peat from Lithuania for phytosanitary reasons. The result: Lithuania’s exports to China decreased by 80% in January-October compared to the same period of the previous year. The commissioner notes that the case is “not just about Lithuania, as it affects supply chains within the European Union”. Swedish and German companies were also affected by these Chinese measures.

Risk of clogging

The constitution of the two panels will also be a test for the WTO, where China has been accused of a lack of transparency by not declaring in writing many of the restrictions it has imposed while the effects of the measures are being seen. . Nevertheless, the European Union will still lose a lot of time. In the near future, the WTO will examine the European request on December 20, 2022. China may once oppose the establishment of the panel. In this case, the Union can renew its application and a special group will be formed at a new meeting on January 30, 2023.

The decision of the two boards can take up to a year and a half. Another obstacle: if the decision is not in China’s favor, the latter can appeal, knowing full well that it will have no chance of success. The WTO’s appellate body is no longer functioning, and the United States is blocking the replacement of the judges who should sit there.

Another solution would be to use the anti-coercion tool developed by the European Commission to complement the arsenal of repression in such cases. Judge Valdis Dombrovskis “Within the existing legislation, a WTO special group” is “the most effective way”. However, once the anti-coercion tool is actually launched, it cannot be ruled out that it will be launched in parallel. The escalation has just begun.