Germany ignored: EU declares trade war on China despite fury from Berlin

Berlin ‘facing dilemma’ over China reveals expert

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The European Union said it had launched a case at the World Trade Organisation (WTO) against China over what the EU said were China’s discriminatory trade practices against Lithuania.

Brussels added on Thursday: “These actions, which appear to be discriminatory and illegal under WTO rules, are harming exporters both in Lithuania and elsewhere in the EU, as they also target products with Lithuanian content exported from other EU countries.”

A row between China and Lithuania erupted after the Baltic state allowed the opening of the Taiwanese Representation office in Vilnius.

Lithuania’s Foreign Ministry said on Thursday it hopes a trade dispute with China will be solved with consultations between China and the European Union.

The ministry said in a statement: “Lithuania hopes that China will agree to participate in consultations with the EU and that they will be successful not only in resolving existing trade disruptions but also in ensuring long-term sustainable solutions.”

European Commission Vice President Valdis Dombrovskis also said on Thursday: “Certainly, there can be a diplomatic solution. From the EU side (…) we are trying to solve the dispute amicably, there are two parallel tracks.”

The move comes despite Germany having pushed Brussels not to hit China with counter-sanctions over fears they would impact Berlin’s export to the Communist country.

The new German Government is facing increased pressure from allies and the German population to give up the huge trading partner.

The ties between the two countries are so entangled, the Chinese Government has a stake in Germany’s Hamburg terminal.

Almost one in three shipping containers from this port is going to or from China.

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The mounting pressure comes a month after China pressured German car parts giant Continental (CONG.DE) to stop using components made in Lithuania, two people familiar with the matter told Reuters, amid a dispute between Beijing and the Baltic state over the status of Taiwan.

The targeting of Continental is an example of how the China-Lithuania diplomatic spat is spilling over into business in an era of global supply chains and affecting Germany’s car industry, a lucrative pillar of Europe’s biggest economy.

The Chinese government, which views self-ruled Taiwan as its territory, downgraded diplomatic ties with Lithuania last month after the opening of a representative office by Taiwan in Vilnius.

Lithuania’s ruling coalition had also agreed last year to support what it described as “those fighting for freedom” on the island.

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Continental, one of the world’s largest car parts maker, has production facilities in Lithuania, making electronic parts such as controllers for vehicle doors and seats, and exports to clients globally including China.

German industry sources said the pressure was not only being felt by Continental but up to a dozen companies, mainly from the automotive and agricultural sectors, they said.

Continental, which supplies all of Germany’s big automakers, declined to comment on whether it had been asked by the Chinese government to cut links with Lithuania.

China’s foreign ministry denied that Beijing had pressured multinational companies not to use Lithuanian-produced parts though said its companies no longer trusted Lithuania.

A spokesperson added: “The practice of ‘one China, one Taiwan’ grossly interferes in China’s internal affairs and seriously violates China’s core interests.”

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