The European Union raised its concerns over a growing dispute between member state Lithuania and China to the World Trade Organization as efforts by the bloc to get information from Beijing have been rebuffed.  

The EU raised Lithuania’s claim that China has applied “unannounced sanctions” on its products with WTO Director-General Ngozi Okonjo-Iweala, who discussed it with Chinese Premier Li Keqiang, according to a diplomatic memo seen by Bloomberg. China has denied it’s blocking Lithuania’s exports. 

Tensions between China and Lithuania have been escalating since Taiwan opened a representative office in the Baltic nation’s capital last month, something Beijing deems disrespectful to its sovereignty. China recalled its ambassador and downgraded ties with Lithuania. Vilnius asked the European Commission, the bloc’s executive arm, to intervene earlier this week. 

“The EU is informed that Lithuanian shipments are not being cleared through Chinese customs and that import applications from Lithuania are being rejected,” the EU’s trade chief, Valdis Dombrovskis, told reporters in Brussels on Thursday. “We are in close contact with Lithuanian authorities and also reaching out to Chinese authorities to clarify this situation.” 

Meetings Declined

The EU has tried to gather information from customs authorities in Beijing, but requests for meetings have been turned down, citing Covid-19, according to a person familiar with the matter. 

The EU is now trying to engage with China through parallel and multiple channels, said the person, who asked not to be identified because the process is private.

An official at the Chinese embassy in Brussels declined to immediately comment on the bloc’s effort to arrange meetings regarding Lithuania. 

Lithuania informed EU ambassadors on Wednesday of the retaliatory steps China was taking, including removing Lithuania from customs databases making it impossible to clear goods, raising difficulties with customs and imposing restrictions on commercial links between Lithuanian and Chinese companies, according to the memo.

Beijing has also downgraded Lithuania’s diplomatic status in China and refused to process diplomatic cargo, according to the memo. 

Chinese state-backed media Global Times has denied there are any trade disruptions. 

EU Investigation

In a joint statement on Thursday, the EU’s foreign policy chief, Josep Borrell, joined Dombrovskis in saying that the bloc was investigating the claims and was reaching out to Chinese authorities to seek clarification.

“If the information received were to be confirmed, the EU would also assess the compatibility of China’s action with its obligations under the World Trade Organization,” the statement said.

Dombrovskis told reporters he spoke on the phone with China’s outgoing ambassador to the EU on Thursday morning, when he asked China to help facilitate outreach and to clarify the situation.   

WTO rules permit the director general to help resolve certain disputes through a voluntary procedure called “good offices.” The idea is to engage an outside independent person unrelated to the dispute to help the parties find a mutually agreed solution without resorting to a formal dispute settlement process.

To be sure, any formal claim with the WTO could take a long time, with no assurance of success. A formal dispute proceeding could take as long as three years, after which China could appeal the judgment. 

Okonjo-Iweala spoke with Li on Dec. 3 but it’s not known whether Lithuania was discussed.