Europe needs to stand up to China’s “illegal” pressure on Lithuania and foreign companies operating there or risk damage to the international trade system, according to the Baltic country’s foreign minister.
Gabrielius Landsbergis told the Financial Times that China had escalated its conflict over Lithuania’s ties with Taiwan to include harassment of European companies which use Lithuanian-made components. He will tell EU foreign ministers about the harassment at a meeting on Thursday and Friday, he said.
“Now there has to be a very clear answer from Europe. Europe has to say it’s not the way to treat the single market. It’s a test for the rules-based international trade order. Europe has to stand up,” Landsbergis added.
Lithuania is at the centre of a geopolitical row after Vilnius allowed Taiwan to open a representative office in its own name, rather than the usual evasion of calling it after its capital city, Taipei.
China reacted furiously, recalling its ambassador and downgrading the status of Lithuania’s embassy in Beijing, stopping Lithuanian goods at its borders, and warning European companies such as German car part maker Continental not to use components from the Baltic country.
China demands that governments deny Taiwan any treatment suggesting sovereignty. Beijing opposes any use of the country’s official moniker, Republic of China, or its geographic name Taiwan, which it sees as an attempt by Taipei to pursue de jure independence.
Landsbergis and other Lithuanian officials insist that Vilnius has abided by Beijing’s policy but that it is free to establish commercial and cultural ties with Taiwan.
“Lithuania did nothing wrong, it did nothing illegal, we did not break any international obligations. It’s actually vice versa. What is being done to our companies, the name of our embassy being changed unilaterally, what is now being done to European companies, all this is most likely illegal,” the Lithuanian foreign minister said.
Taiwan has sought to soften the blow of Beijing’s ire by establishing a $1bn credit fund for Lithuanian-Taiwanese projects and a $200m investment fund in the Baltic country and purchasing 120 containers that were blocked at China’s ports.
Lithuania’s own position was muddied last week when president Gitanas Nauseda said it had been a “mistake” to name the office after Taiwan rather than Taipei. Landsbergis said that the government was “in the process of aligning” positions with the president as both saw “the whole situation in a similar manner”, although he did not give any details.
Landsbergis said China’s “unprecedented” harassment of other countries’ companies showed the “urgent need to develop anti-coercion instruments” in Europe and elsewhere.
“It’s a test for the EU but it’s also a test for the west. We felt responsible as a western society after the second world war to introduce a rules-based order for trade. It worked. Now we’re seeing it’s being tested,” he added.
Lithuania is facing pressure not just from China; Belarus and Russia threaten on its eastern borders. Landsbergis called Moscow a “geopolitical disrupter” and said the ripples from its actions at the Ukrainian frontier had affected Lithuania and its neighbours.
Vilnius is worried about any concessions that could be made to Russia as well as about the possibility that Moscow could move its troops from Ukraine to Belarus, which is closer to Lithuania, he said.
“A very serious answer needs to be sent to Putin,” Landsbergis said, stressing that he believed Nato would reinforce security in the Baltics if the situation escalates.
Written by FT trade specialist Alan Beattie and delivered to your inbox on Mondays, Trade Secrets is the FT’s must-read briefing on the changing face of international trade and globalisation. Sign up here