China has dropped trade measures targeting Lithuania that the Baltic nation deemed illegal as the two governments discuss how to gradually move toward normalizing diplomatic relations.
A regime of “economic coercion” that was challenged at the World Trade Organization, including Lithuania being “deleted from the customs systems so no business are able to export to China,” has ended, Lithuanian Foreign Minister Gabrielius Landsbergis told Bloomberg in an interview on Monday.
Lithuania became embroiled in a dispute with China in 2021 after allowing Taiwan to set up a representative office under the island’s name, a move Beijing regarded as a violation of its sovereignty. China responded by withdrawing its ambassador to Lithuania and imposing an effective trade ban on the European Union member state.
Landsbergis said that while the block on goods had now been lifted, businesses were still wary about conducting trade with China.
“There’s a huge trust issue, not just from the government but from the business as well,” he added. “Since it has been done in the past, nobody can be sure that it cannot be repeated because it’s a non-rules-based approach.”
Chinese official customs data show little recovery in direct bilateral trade. Imports from Lithuania were down more than 70% in the first 10 months of this year compared to the same period in 2021, before the row broke out.
Trade between Beijing and Lithuania collapsed in the months after the spat, with China only importing $60,000 worth of goods from Lithuania in January 2022, a 99.8% drop from a year earlier. The EU responded on behalf of Lithuania, taking China to the WTO. That case is still pending.
China’s Foreign Ministry reiterated that Lithuania’s action on Taiwan was “wrong” and that its response was “legitimate” in protecting its interests.
“The problem is fundamentally with the Lithuanian side,” the ministry said in a written response. “China has always acted in accordance with WTO rules and will handle relevant issues in accordance with relevant rules.”
Landsbergis said his government had been talking to China for almost two years about normalizing diplomatic relations. “We’re having a conversation, which, I am saying, with patience, I think could provide some opportunities,” he said.
Neither side has officially reinstated its diplomats in the other country.
There’s also been no change to the name of Taiwan’s representative office in Vilnius, according to the head of the Europe department at the Ministry of Foreign Affairs in Taipei.
“This is a non-issue,” he said at a regular briefing on Tuesday.
--With assistance from James Mayger, Lucille Liu, Samson Ellis, Colum Murphy and Jenni Marsh.
(Updates with comment in second paragraph.)