Status: 12/07/2022 3:32 p.m
The EU is moving ahead with its proceedings against China before the World Trade Organization. It’s about patent protection for European high-tech companies and Chinese trade restrictions against Lithuania. In the end there could be punitive tariffs.
The EU is stepping up its crackdown on China at the World Trade Organization (WTO). The EU Commission called on the WTO to set up two so-called panels, i.e. dispute settlement bodies. The background is, on the one hand, China’s attempts to prevent European high-tech companies from enforcing their patent rights. On the other hand, it is about trade restrictions that Beijing issued after a diplomatic dispute against the EU country Lithuania.
China puts EU companies under pressure
In both cases, the Chinese measures are “extremely damaging” for European companies, the EU Commission said. It is in the economic and strategic interest of the EU for the measures to be lifted.
The EU Commission accuses China of putting pressure on telecom groups from Europe, for example, so that they do not sue against the infringement of their patent rights in countries outside of the People’s Republic. Since August 2020, Chinese courts have been able to prohibit patent owners from asserting their rights in foreign courts. If they do so, they face fines of the equivalent of 130,000 euros a day.
5G patents affected
From Brussels’ point of view, this Chinese policy de facto deprives European technology companies of the opportunity to exercise and enforce the rights that give them a technological edge. According to earlier information from the EU Commission, telecommunications companies such as Ericsson and Nokia, which hold patents in connection with mobile phone standards such as 5G, are particularly affected by the patent dispute.
In February, the EU went before the WTO over patent rights. At the end of January, the EU had also initiated WTO proceedings against the Baltic state of Lithuania over Chinese trade restrictions. A representation of Taiwan had opened there under its own name. Beijing does not recognize the island as independent and therefore reacted with coercive measures against Lithuania.
Are punitive tariffs coming soon?
The competent WTO dispute settlement body is now to deal with the EU applications on December 20th. China can oppose the establishment of the so-called panels. In this case, the applications would be renewed and the arbitral tribunals would be set up at the end of January 2023, the EU Commission announced.
The proceedings of the arbitral tribunals could then last up to one and a half years. Ultimately, the bodies could then allow the EU to impose retaliatory measures such as punitive tariffs on Chinese imports.