The Lithuania-China Row: The European Union’s Search for a Strategy and Instruments to Deal With China

The increasing use of measures of economic coercion by China has caused its trading partners to review their close trade ties with that country as well as their ability to resist such pressure. In December 2022, the European Union (EU) requested that the World Trade Organization (WTO) adjudicate its dispute with China regarding restrictive trade measures China had imposed on Lithuania in response to its foreign policy actions that were not to China's liking. The EU also drafted new legislationthe Regulation of the European Parliament and of the Council on the Protection of the Union and its Member States from Economic Coercion by Third Countriesto deter third countries from applying coercive measures that target the EU and its Member States. This paper considers the new instrument in the context of the EU's evolving 'economic de-risking' strategy on China and a wide range of measures aimed at protecting the common market from the unfair behaviour of China and other states and reducing the EU vulnerability vis-à-vis economic and security threats. The EU's ability to deter states from applying coercive measures against it hinges upon its ability to strengthen its market power and to use the new instrument when necessary.