EU escalates clash with China at WTO over patents and Lithuania

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The European Union said on Wednesday it had requested the creation of arbitration panels at the World Trade Organization, the next step in two trade disputes with China.

The disputes, both brought to the WTO earlier this year, concern alleged Chinese restrictions on EU companies’ rights to use a foreign court to protect their high-tech patents and trade with EU member Lithuania.

“In both cases, the measures are very harmful to European companies,” the European Commission said in a statement, adding that the measures against Lithuania disrupt intra-EU trade and supply chains.

The European Commission, which oversees the trade policy of the 27-member European Union, formally requested consultations with China at the WTO, the first step in a WTO challenge. These types of consultations rarely resolve disputes.

The European Commission said it will request the formation of a WTO panel at the next meeting of the WTO’s Dispute Settlement Body on Dec. 20, noting that panel proceedings can take up to a year and a half.

One of the disputes concerns the reduction of China’s diplomatic ties with Lithuania from December 2021 and the pressure exerted on multinationals to sever their ties with the Baltic nation of 2.8 million people, after it allowed Taiwan to open a de facto embassy in Vilnius.

The European Commission said China had also imposed import bans on alcohol, beef, dairy products, logs and peat from Lithuania based on plant and food safety standards without proving that the bans were justified.

In the other case, the European Commission stated that since August 2020, Chinese courts had issued “injunctions against lawsuits” that prevented European companies from resorting to non-Chinese courts, such as those in the EU, in relation to essential patents.

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

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