EU Escalates WTO Case Against China Over Patents, Lithuania

 

The European Commission said it had asked the World Trade Organization (WTO) to establish adjudicating panels in two trade disputes with China, after failing to reach a bilateral settlement.

The disputes concern alleged Chinese restrictions on EU companies’ rights to use foreign courts to protect their high-tech patents and on trade with EU member Lithuania.

The EU executive said both sets of measures were highly damaging to European businesses, with those against Lithuania disrupting intra-EU trade and supply chains.

 

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The Commission had, at the beginning of the year, formally requested consultations with China, the first step in a WTO challenge. But such consultations rarely resolve disputes.

The EU executive said the WTO panels would likely be formed in early 2023, noting that panel proceedings can last up to one and a half years.

China will handle the EU’s trade disputes request in accordance with the WTO’s dispute settlement procedure, its commerce ministry said in a statement.

 

Building pressure on China

The panel requests come as the European Union reviews its stance towards China, seeing it increasingly as a competitor and system rival.

Russia’s invasion of Ukraine has also led EU leaders to express concern about economic reliance on China, which has taken a more neutral stance on the conflict.

The Lithuania dispute stems from China’s downgrading of diplomatic ties with the Baltic nation from December 2021, and pressure on multinationals to sever links with it, after it allowed Taiwan to open a de facto embassy in Vilnius.

The Chinese foreign ministry said in a statement on Thursday that accusations it was targeting Lithuania with “discriminatory measures” were “pure fabrications”. It did not elaborate.

In the other case, the Commission said Chinese courts had since August 2020 issued “anti-suit injunctions” that prevent European companies from seeking redress over standard-essential patents in non-Chinese courts, such as EU courts.

The Commission said Chinese manufacturers used the injunctions to pressure patent rights holders to grant them cheaper access to European technology.

 

• Reuters, with additional editing by Vishakha Saxena

 

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