Brussels is launching a case against China at the World Trade Organisation over its treatment of Lithuanian goods, amid reports that Germany fears the action will undermine its own trade links with the world’s second-largest economy.
China has restricted imports from the Baltic state in a row over the status of Taiwan.
Valdis Dombrovskis, the trade commissioner, said attempts to resolve the dispute directly have failed, leading to the WTO action.
“We see no other way forward than to request WTO dispute settlement consultations with China,” he said.
“The EU is determined to act as one and act fast against measures in breach of WTO rules, which threaten the integrity of our Single Market. We are in parallel pursuing our diplomatic efforts to deescalate the situation.”
The European Commission said China has retaliated with trade restrictions, which “include a refusal to clear Lithuanian goods through customs, rejection of import applications from Lithuania, and pressuring EU companies operating out of other EU member states to remove Lithuanian inputs from their supply chains when exporting to China”.
The end result of consultations and adjudications could be to allow Brussels to retaliate with tariffs on imports from China.
European nations more commonly use the name of Taiwan’s capital, Taipei, to avoid incurring Chinese wrath.
The Commission’s decision to launch a case came after the German government was reported to be seeking allies within the EU against taking action on China.
Officials close to the new Chancellor, Olaf Scholz, are pushing for other nations to encourage Brussels to take a softer stance on Beijing, Politico reported.
China was Germany’s second-biggest export market in 2020, according to the Federal Statistics Office, and the biggest source of imports.
German factories rely particularly heavily on trade with China, which has been heavily disrupted by Covid shutdowns, shipping problems and spiralling costs since Covid struck last year.