The European Union (EU) finally showed its solidarity with Lithuania by filing a lawsuit at the World Trade Organization (WTO) against China for “discriminatory” trade practices on Jan. 27. The first phase of which was negotiated with China at the WTO, accusing Beijing of undermining the single market of the 27 member states of the EU.
The European Commission has spent the last few weeks gathering evidence of Chinese economic and trade restrictions. Including customs refusal to clear Lithuanian goods, refusal to approve import applications from Lithuania, and pressure on other EU companies to remove Lithuanian products from their supply chains when exporting to China.
On the same day, the Office of the U.S. Trade Representative said it would ask to join these WTO consultations in solidarity with Lithuania and the EU.
On Jan. 29, Australia, which has also received economic coercion from China, asked to join these consultations. Australian Trade Minister Dan Tehan said in a statement, “Australia has a substantial interest in the issues raised in the dispute brought by the European Union against China regarding discriminatory trade practices imposed on Lithuania and will request to join these consultations.”
Thus, it is significant that at the beginning of 2022, Europe, the U.S., Australia, and China have set up a battlefield in the WTO.
1. Highlighting the EU’s joint position to counter China
As we all know, the EU’s 27 member states adopt the rule of “unanimity” in decision-making. However, with the different interests of member states, the strong penetration of China, and the new chancellor of Germany, the EU leader worries that it has become too aggressive in protecting Lithuania from the economic coercion of China.
Wang He, from Chinese language media Da Ji Yuan, said it is not easy for the EU to say “no” to China with one voice. It is not an easy task to say “no” to China.
Prosecuting China at the WTO is the third landmark event after the first human rights sanctions against China in 30 years. It was implemented in March 2021 and later extended for one year, shelving the EU-China Comprehensive Investment Agreement in May 2021. Wang He said this shows that the EU member states are gaining strength in their unified action against China.
The use of economic and trade relations as a “weapon” by China, especially against Lithuania this time, has made the EU realize its weakness and directly accelerated the legislative process of the EU Regulations on the Protection of the Union and its Member States from Economic Coercion by Third Countries (EU). As a result, the EU Commission published a draft proposal on Dec. 8, 2021, establishing an “effective and comprehensive framework for Union action against economic coercion.”
According to Wang He, Lithuania’s economic coercion also has a far-reaching impact: EU companies will seek to reduce their dependence on Chinese markets and supplies. Countries will actively plan to reduce their reliance on China.
2. China is waging “an economic war” against Australia
Australia joined the EU’s WTO case against China because it opposes economic coercion and discriminatory and restrictive trade practices that undermine the rules-based international trading system and cause economic damage.
Australian Trade Minister Tehan said: “We are committed to upholding and supporting the multilateral trading system with the WTO at its core. The WTO dispute settlement system is designed to help members settle their differences respectfully.”
In fact, since 2020, as a result of Australia taking the lead in proposing an independent investigation into the origin of the coronavirus outbreak, among other factors, Beijing has sought to “bring Australia into submission.” Kurt Campbell, the National Security Council’s Indo-Pacific coordinator, said on Dec. 1, 2021, that this was like “an economic war” with Australia. As a result, China-Australia relations have been at the worst crisis since June 4, 1989. However, because of the importance of Australian commodities such as iron ore and coal to the Chinese economy and other factors, China’s economic coercion has hit a brick wall.
On Dec. 16, 2020, Australia filed a formal appeal with the World Trade Organization against China’s decision to impose anti-dumping and countervailing duties of up to 80% on Australian barley exports to China. However, according to Wang He, China is always good at muddying the waters. It filed a WTO case against Australia on June 24, 2021, for “double reverse” measures on imports of railroad wheels, wind towers, stainless steel sinks, among others, from China. Now that the EU has taken on China in the WTO, It’s a good chance for Australia to expose the true nature of the Chinese regime.
3. Prosecuting China in the WTO over it’s use of economic pressure to advance political goals
The Biden administration has elevated U.S.-Taiwan relations to counter China’s military provocations. There has been strong support for Lithuania since the EU announced that it was suing China at the WTO. The U.S. said it was joining the relevant WTO consultations. The following day Undersecretary of State Fernandez would soon visit Lithuania to discuss a $600 million memorandum of understanding to expand opportunities for U.S. exporters and Lithuanian buyers in high-tech manufacturing, business services, and renewable energy business.
Australia’s WTO case against China showed that it would not yield to Beijing’s pressure. So now, the U.S. is joining in to open up a new front, namely a comprehensive countermeasure against China’s attempts to use economic pressure to advance political goals. It also implies the globalization of “extreme strategic competition” between the U.S. and China.
Initially, the U.S. and China were engaged in a fierce battle over WTO reform. Now, by joining forces with the EU and Australia, the U.S. can expose China’s lies—its consistent non-compliance with WTO rules on the table, thus removing some obstacles to WTO reform.
Wang He said China had become the world’s second-largest economy, the largest trading country of goods, and the largest absorber of foreign investment. China is using this to bully the world, which must not be tolerated. Franklin D. Roosevelt said in “Fireside Chat: The Arsenal of Democracy” on Dec. 29, 1940, that: “No man can tame a tiger into a kitten by stroking it.”