US counters China’s ‘economic coercion’ on Lithuania in Taiwan dispute

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A high-level US delegation traveled to Lithuania this week to show support for the Baltic state in its growing dispute with China over Taiwan.

Beijing effectively blocked imports of Lithuanian goods last month after Taiwan was allowed to open a representative office in the capital, Vilnius. China claims Taiwan as part of its territory. The dispute quickly escalated into a trade fight between the West and Beijing.

Jose W. Fernandez, the undersecretary for economic growth, energy, and the environment, met with Lithuanian government ministers in a visit described by the U.S. State Department as showing “strong support and to Lithuania in the face of political pressure and economic coercion from the People’s Republic of China.” The two sides discussed implementing a $600 million trade recovery deal.

Lithuania welcomed the intervention. “We continuously feel the strong political and practical support of the United States in our dispute with China over its systemic violations of international trade rules,” the Foreign Office said in a press release.

Taiwan

The dispute began in 2020 when Lithuania’s new government pledged to support what it called ‘freedom fighters’ in Taiwan and criticized Beijing’s human rights record in Hong Kong. and in Tibet.

In May 2021, Lithuanian lawmakers approved a resolution calling China’s treatment of its Uyghur minority “genocide”. China has denied these accusations.

In November last year, Taiwan officially opened the representative office in Vilnius. Its director, Eric Huang, said the goal was to “strengthen [the] comprehensive bilateral relations between Taiwan and Lithuania.

Lithuania said the opening did not affect its policy towards China and did not imply any official recognition of Taiwan as independent from Beijing. The move, however, stoked fury in Beijing.

“From Beijing’s point of view, it crosses a line, a real red line on how they approach Taiwan. And that’s what later led Beijing to downgrade its embassy in Lithuania,” said Grzegorz Stec of the Mercator Institute for Chinese Studies based in Berlin. in a recent interview with VOA.

Blockade of imports

In December, China effectively blocked Lithuanian imports by removing it from its country of origin list, meaning goods cannot be cleared in China, while urging multinational companies to sever ties with the country. Baltic.

“And this works not only in some cases for goods produced in Lithuania, but also for goods that include components produced in Lithuania in their supply chain. In addition, European exports that have passed through Lithuanian ports have also been affected,” says Stec.

FILE – EU Trade Commissioner Valdis Dombrovskis speaks during a press conference in Brussels, December 7, 2021.

EU Challenge

The European Union accuses China of threatening the integrity of its single market and has issued a challenge to the World Trade Organization.

“We are moving forward to defend EU rights, European Commission Executive Vice-President Valdis Dombrovskis told reporters on January 27.

“Since December 1, Chinese customs have banned Lithuanian imports from the Chinese market. … Chinese companies are canceling orders from Lithuania. China is also reducing its exports to Lithuania. In addition, China is putting pressure on companies organizations to abandon the use of Lithuanian components in their production,” said Dombrovskis.

It will likely take years for the WTO challenge to be resolved. In the meantime, the EU is working on legal instruments to combat coercive practices.

“This could include real targeting or restricting access of companies from a specific country to the single market. At the moment we don’t really have a clear instrument to do this,” Stec told VOA.

Lithuanian lifebuoy

The Taiwanese government has offered Lithuania a $1 billion credit program and a $200 million separate fund to boost trade. Lithuania has donated hundreds of thousands of COVID-19 vaccines to Taiwan.

The United States also stepped in to make up for the shortfall caused by the Chinese blockade. The Export-Import Bank of the United States signed a $600 million export credit agreement with Lithuania, focusing on manufacturing, business services and renewable energy.

But it’s not just about the money, Stec said. “The symbolic implication [by the U.S.] of course supports Lithuania by showing that it is not isolated in its steps. At the same time, it also makes it harder to unravel the situation as it puts it back into the spotlight once again.”

US officials also held talks in Brussels on joint measures to combat economic coercion.

FILE - Chinese Foreign Ministry spokesman Zhao Lijian gestures as he speaks during a daily briefing at his ministry in Beijing, February 24, 2020.

FILE – Chinese Foreign Ministry spokesman Zhao Lijian gestures as he speaks during a daily briefing at his ministry in Beijing, February 24, 2020.

‘Treason’

China, meanwhile, accuses Lithuania of “treason”.

“The problem between China and Lithuania is a bilateral problem between China and Lithuania, not between China and Europe. We urge Lithuania to correct its mistakes immediately and not to act as a pawn of the pro-independence separatists of Taiwan and anti-China forces. We also remind the EU to see right from wrong and to be mindful of Lithuania’s attempts to hijack China-EU relations,” the Chinese Ministry of Foreign Affairs spokesperson said. Foreign Affairs Zhao Lijian to reporters on January 27.

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