China unable to accept EU's premature panel requests

China said it was not in a position to accept two requests from the European Union for dispute panels regarding Chinese trade measures at a meeting of the Dispute Settlement Body on Dec 20, during the World Trade Organization's General Council Meeting, which concluded on Tuesday.

The EU submitted a first request for the establishment of a WTO dispute panel to examine its complaint regarding measures attributable to China restricting the trade in goods and services to or from Lithuania or linked to Lithuania.

According to the EU, China's measures restricting trade from Lithuania not only impact Lithuania but also affect intra-EU trade and intra-EU supply chains, and impact the functionality of the EU internal market.

The EU argued that consultations were held with China on March 14-15, 2022 with a view of reaching a mutually satisfactory settlement on the matter, but unfortunately they failed to settle the dispute, prompting the EU to make its request for a panel.

However, China said it regretted the EU’s decision to request a panel and was not in a position to support such a request, adding that China attaches great importance to WTO rules and its relevant commitments and carries out foreign trade with the EU and other WTO members in a manner that is transparent and compatible with WTO rules.

China held consultations with the EU in good faith and continued to engage with the EU after the consultations with the intent of exploring the possibility of resolving the dispute in an amicable way. China said it believes it is premature to establish a panel on this dispute.

Another request submitted by the EU for a dispute panel to examine its claims is regarding China’s enforcement of intellectual property rights.

The EU said that Chinese measures unduly restrict the possibility to enforce intellectual property rights in China and are inconsistent with China's obligation under the Agreement on Trade-Related Aspects of Intellectual Property Rights, also known as TRIPS.

The EU contended that it raised this issue of China's measures a number of times bilaterally as well as in the WTO TRIPS Council and during China's trade policy review at the WTO, unfortunately without resolving the problem. Consultations with China took place on April 6, 7 and 12, 2020, and while useful in clarifying a certain number of points, they failed to solve the problem. The EU urged China to bring its measures in line with its WTO obligations.

China said it regretted and was puzzled by the EU move and was not in a position to support the panel request, as China attaches great importance to the protection of intellectual property rights and has maintained a sound environment for innovation through various efforts, including effective intellectual property protection.

With regard to the issue at dispute, China said that it is neither the creator nor the major user of the anti-suit injunction and that the domestic courts of many WTO members, particularly in the EU, have issued a considerable number of injunctions in standard essential patents-related litigations.

China stressed it is strongly dissatisfied that the EU has brought the decisions of Chinese courts before the WTO dispute settlement system and that this not helpful in resolving the dispute in a positive manner.

China said it has fully engaged with the EU in good faith but that, regrettably, the EU has chosen to request the establishment of a panel rather than continuing engagement with China bilaterally. Given the overall circumstance, China believes it is premature to establish a panel but remains open to further engagement with the EU.