European Union Supports Lithuania in Trade Fight with China

“Look, everyone can understand this is a test,” said Benjamin Haddad, senior director of the Europe Center at the Washington-based Atlantic Council. “This is a test of whether Europeans will break off their solidarity with one of their smaller members in exchange of economic interests.”

Haddad told VOA that he wouldn’t be surprised if the EU came up with strong measures in support of Lithuania. “Because I think there’s just this feeling that Lithuania should not be left on its own.”

Besides, doing so is consistent with the vision for Europe spelled out by French President Emmanuel Macron. France took over the six-month EU presidency Jan. 1. “If you talk about sovereignty, or if you talk about strategic autonomy, that means defending all of the EU members against external challenges and threats. Clearly we have China being aggressive against one of the smaller (EU) members.”

French and EU policymakers are no doubt mindful of “a broader shift in European mindsets about China,” Haddad said.

“Three years ago, the EU released a paper saying China is a trade partner, an economic competitor but also a systemic rival; I think now you see more and more of the systemic rival piece take precedence.”

The battle between Beijing and Vilnius has been closely watched around the world. Analysts in Poland recently wrote that China’s new, more aggressive tactics are also meant to intimidate other EU countries, mainly those in central Europe, “where the economic cooperation model with China is similar to Lithuania’s.”

That model involves only minor direct sales to China but significant indirect export through the supply chains of Western European companies. China is applying its punitive measures to products containing any Lithuanian-made content, in effect issuing what analysts describe as secondary sanctions that also harm businesses and industries from third countries, including other nations in the EU.

Lithuania’s direct exports to China constitute only 1% of its total exports, but its industry and manufacturing are closely linked with German and other multinational corporations that Beijing is pressuring to stop sourcing from Lithuania.

Given Germany’s status as an economic powerhouse in the EU, the reaction of the German businesses and government to China’s pressure is considered crucial.

Observers noticed that the Federation of German Industries, or BDI, supported the EU’s WTO filing, saying the union needs to take decisive measures.

New message from Berlin

Addressing an audience gathered at the Mercator Institute to discuss its China 2022 forecast, Tobias Lindner, a German deputy foreign minister, described the disagreements with China as touching “the core of European values and interests — not addressing this now will cost us dearly in the long run.”

“We will continue to seek cooperation between China and the EU and Germany,” Lindner said. “However, the partnership that we seek will be looked at strategically: Does it conform with our values? Is it in our interest?”

Lithuania’s top economic official said her government hasn’t ruled out a diplomatic solution, while also underscoring the EU’s role going forward. “If the EU talks in one voice, then there is always a solution,” Ausrine Armonaite told Politico.

“When it comes to a situation that Lithuania is in, today it’s Lithuania; day after tomorrow it may be any other European countries,” she said.

There are signs that mutual support and solidarity are taking root among EU nations as the bloc and member states individually face challenges from multiple directions.

“The fact that we’re a member of the European Union, it means we have to defend other member states of the EU should they feel they’re being coerced by third parties,” Anze Logar, Slovenian foreign minister, told VOA in an interview last month.

In September, Slovenian Prime Minister Janez Jansa wrote a letter to fellow EU member states urging them to support Lithuania as the latter started to receive punitive blows from Beijing.

Asked whether Slovenia came under fire from Beijing because of the letter, Logar said it wouldn’t have mattered.

“It’s a matter of principle,” he said. “If you’re a member of a club, you have to defend your partners in this club, because we expect we’ll be defended when somebody from outside attacks us, that other member states will come to our own defense.”

Slovenia may need help from the EU club quite soon. Slovenian businesses reported their contracts were being canceled by China after Jansa described the tactics China deployed against Lithuania as “terrifying” and said his government is in talks with Taiwan to establish representative offices.

On Thursday, following the EU’s WTO filing announcement, the U.S. Trade Representative’s office announced that “the United States will request to join these @WTO consultations in solidarity with Lithuania and the European Union.”

The State Department announced Friday that Undersecretary for Economic Growth, Energy, and the Environment Jose Fernandez will travel to Vilnius on Sunday, followed by a stop in Brussels.

Washington’s “continuing strong support for Lithuania in the face of political pressure and economic coercion from the People’s Republic of China” is on the agenda of discussions between Fernandez and his Lithuanian counterparts, the State Department said. Fernandez will also be discussing measures to counter economic coercion with EU officials in Brussels.

Natalie Liu is VOA Diplomatic Correspondent. This article  is published courtesy of the Voice of America (VOA).