PARIS — France wants the EU to punch back quickly to stop China holding the bloc hostage in a snowballing trade conflict over Lithuania.
As it takes over the rotating presidency of the Council of the EU, Paris is pledging to make the bloc’s trade policy more assertive by bolstering its defense arsenal in commercial disputes.
EU tensions with China over Lithuania are emerging as France’s first opportunity to act. In reaction to warming diplomatic ties between Vilnius and Taiwan, China has not only cracked down on Lithuanian imports but also on goods from other EU countries — such as France, Germany and Sweden — that include parts from Lithuanian supply chains.
The EU has plans to roll out a new trade weapon called an “anti-coercion instrument” to retaliate in precisely these kinds of cases but that fresh legislation could take years to fully enter into force and Paris is signaling that action over Lithuania would be needed well before that.
When asked whether Paris would push for EU action to resist Beijing before the anti-coercion instrument is ready, a senior French government official on Thursday told POLITICO: “Yes. We will take measures very quickly.”
“The anti-coercion instrument is still under negotiation, but maybe something can be done in advance in support of Lithuania,” he added, in separate remarks.
The Chinese embargo against Lithuania came as a punishment after the Baltic country in May pulled out of the so-called “17+1” group — a diplomatic initiative by which Beijing engages with Central and Eastern European countries — and then increased ties with Taiwan, with Taipei and Vilnius opening diplomatic offices in each other’s country.
“It is not clear what the determining reason for China’s behavior towards this country was,” the French official said. “Perhaps it was the Taiwan issue, but there was also the fact that Lithuania left the 17+1 mechanism that China had initiated. You know, we have always been extremely determined that this dialogue should be conducted at 27+1.”
The trade spat between the world’s second biggest economy and the small Baltic country is turning into a global geopolitical issue, where economic might is seen as liable to steamroller democratic principles. Taiwan has vowed to create a $200 million fund to invest in Lithuanian industry and boost bilateral trade, while the U.S. is also vowing to take action in defense of Lithuania.
“We have immediate concern about the government of China’s attempts to bully Lithuania, a country of fewer than 3 million people,” U.S. Secretary of State Antony Blinken said on Wednesday during a joint press conference with Germany’s new foreign affairs minister, Annalena Baerbock. “The United States will work with our allies and partners, including Germany, to stand up against intimidation like this.”
“China is pushing European and American companies to stop building products with components made in Lithuania or risk losing access to the Chinese market,” said Blinken following his meeting. “The United States will work with our allies and partners, including Germany, to stand up against intimidation like this.”
Baerbock added that “We as Europeans stand in solidarity at Lithuania’s side.”
That’s a big change in tone from last year, when officials from the previous German government made clear they did not want to back Lithuania in the dispute, arguing Vilnius had boosted ties with Taiwan without consulting its European partners and was now urging solidarity.
During its rotating presidency, Paris will put defense measures and “assertiveness” at the top of its trade agenda, the official in Paris said.
“We will follow the thread of sovereignty all along this presidency,” he said.
As is typical in such cases, China has not officially announced the measures over Lithuania, which are being reported by European companies.
Want more analysis from POLITICO? POLITICO Pro is our premium intelligence service for professionals. From financial services to trade, technology, cybersecurity and more, Pro delivers real time intelligence, deep insight and breaking scoops you need to keep one step ahead. Email pro@politico.eu to request a complimentary trial.
