Lithuania is removed from the list of countries in China’s Customs Database in 2021
Context
The broad context of the dispute is political disagreement between Lithuania and China, which reportedly started with a change of Lithuania’s Government in 2020. Incidents between the two countries included the Lithuanian Department of Defence advising citizens to “throw away their Chinese smart phones” and the country exiting the 17+1 Economic Cooperation Forum (as it was then known).
In November 2021, China was angered by the opening of a Taiwanese Representative Office in Vilnius, which prompted the recall of the Chinese Ambassador from Lithuania, the downgrading of relations between the two countries, and the declaration of the Lithuanian Ambassador as a “persona non grata”.
Shortly after, in December 2021, Lithuanian exporters reported that the country had been removed from the Chinese Customs Database, making it impossible for Lithuanian goods to be imported into China. The details are further elaborated in the EU’s consultation request made at the WTO in 2022 (discussed below). The allegations of economic coercion were explained in the following terms:
“(i) error messages on the IT systems used to input data necessary to secure customs clearance from the Chinese customs authorities;
(ii) containers being blocked in Chinese ports pending customs clearance;
(iii) failures on the part of the Chinese customs authorities to process requests for customs clearance in due time or at all.
Those restrictions are novel, numerous, recurrent, persisting and strongly correlated in temporal and substantive terms, as well as in terms of the provenance of the goods.”
On 22 December 2021, a spokesperson from China’s Foreign Ministry, Zhao Lijian, denied that China had removed Lithuania from the Customs Database, alleging that this was ‘misinformation’. In the same statement, the spokesperson stated that Lithuania ‘should be accountable for the deteriorated relations between both countries’ and that Lithuania must admit and correct its ‘mistakes’. The image below is a screenshot of the relevant section of the press conference. (Note that Google translation has been used to create the image below, and that this is not an authorised translation. References to the “cube” are intended to refer to the Quad)
In a regular press conference held in late-December 2021, the Chinese Ministry of Foreign Affairs again denied the removal of Lithuania from its Customs Database. A few days afterwards, the Chinese embassy in Norway released an official announcement that Lithuania had severely violated the “One-China Principle” which was souring economic and diplomatic relations. Yet the embassy’s announcement continued to deny the Customs Database suspension.
Impact
Minimal trade ties between the two countries, however Cutler and Wester report that Lithuania’s laser industry was particularly impacted by the dispute. It was also ascertainable from government sources that China had suspended the imports of meat products and timber from Lithuania.
Responses
The United States and the European Union strongly supported Lithuania, the United States as an ally and the European Union as part of the political union to which Lithuania belongs. The European Union initiated a WTO dispute in early 2022 (discussed below).
WTO Dispute
DS610 – On 27 January 2022, the European Union made a formal request for consultations with China, and after unsuccessfully resolving the dispute through consultations, requested the establishment of a panel. A panel was composed in April 2023,.
Status
In January 2024, in the context of improved relations, the WTO dispute was suspended . Under the WTO’s dispute settlement procedures, the panel proceedings will lapse if not revived within 12 months of the suspension – i.e. in January 2025. As of December 2024, the proceedings have not yet been revived.
References
Bermingham, Finnbar. (2021) Keeping big brothers at bay: why Lithuania is taking on China. South China Morning Post, https://www.scmp.com/news/china/diplomacy/article/3157869/keeping-big-brothers-bay-why-lithuania-taking-china
Biukovic, L. (2023). The Lithuania-China Row: The European Union’s Search for a Strategy and Instruments to Deal With China. Legal Issues of Economic Integration, 50(4).
Cutler, Wendy and Wester, Shay, “Resilience & Resolve: Lessons from Lithuania’s Experience with Chinese Economic Coercion” https://asiasociety.org/policy-institute/resilience-resolve-lessons-lithuanias-experience-chinese-economic-coercion
Third World Network. 2022. ‘TWN Info Service on WTO and Trade Issues’. December 2022. Available at: https://www.twn.my/title2/wto.info/2022/ti221221.htm
Ministry of Foreign Affairs of the People’s Republic of China. 2021. ‘Spokesman for the Ministry of Foreign Affairs, Zhao Lijian, held a regular press conference on 24 December 2021’ [2021年12月24日外交部发言人赵立坚主持例行记者会] December 24. Available at: https://www.mfa.gov.cn/fyrbt_673021/202112/t20211224_10475509.shtml.
Embassy of the People’s Republic of China in the Kingdom of Norway. 2021. ‘Lithuania should correct its mistakes to tackle the challenge of Lithuania-China relations’ [立陶宛改正错误方能走出困局] December 29. Available at: http://no.china-embassy.gov.cn/zjsg_0/sgyw_134107/202306/t20230614_11097277.htm.
General Administration of Customs of the People’s Republic of China. 2022. ‘Notice on Suspending the Imports of Timber Originated from Lithuania’ [海关总署动植物检疫司关于暂停进口立陶宛原木的通知] February 25. available at: http://www.customs.gov.cn//customs/302249/zfxxgk/zfxxgkml34/4203364/index.html.
General Administration of Customs of the People’s Republic of China. 2022. ‘List of meat products imported from verified countries or regions’ [符合评估审查要求的国家或地区输华肉类产品名单] November 2. Available at: http://jckspj.customs.gov.cn/spj/zwgk75/2706880/jckrljgzyxx33/2812399/index.html.