EU backs Lithuania's plan to aid firms amid China's embargo
Apr 28, 2022
Brussels [Belgium], April 28 : The European Commission has approved, under EU State aid rules, a EUR130 million Lithuanian scheme to support and facilitate access to finance by companies hit by China's trade restrictions.
This comes after Beijing imposed trade restrictions against Vilnius after it allowed the setting up last year of a Taiwanese representative office, which Beijing considers a contravention of its "one China" policy.
Under the scheme, which will run until December 31, 2027, or until the restrictions imposed by China are lifted, whichever happens first, companies that are affected by the exceptional circumstances resulting from China's discriminatory trade restrictions on Lithuania will be able to receive loans up to EUR5 million.
The European Commission said in a statement on Tuesday that the scheme will be open to companies from all sectors, except for the finance, agriculture and forestry, as well as fisheries and aquaculture sectors.
This support will allow the affected companies to adapt their business activities to the new market situation, re-orient their business strategies and improve their liquidity to be able to gradually obtain financing in the market from private financial institutions.
"The loans must be exclusively used for sourcing of (new) inputs from different sources, looking for entering into new business markets or using the time to undertake such efforts. The loans will need to be repaid within 24 months," the statement said.
The Commission found that the scheme is necessary, appropriate and proportionate to support companies affected by the exceptional circumstances resulting from the Chinese trade restrictions to reorient their business strategies.
The exceptional nature of the situation is highlighted, in particular, by the EU's launch of a case at the World Trade Organization against the Chinese discriminatory trade practices with respect to Lithuania, which threaten the integrity of the EU Single Market.
From December 2021, and without informing the EU or Lithuanian authorities, China began to heavily restrict or de facto block imports from and exports to Lithuania, or linked to Lithuania. The Commission has repeatedly raised the matter with the Chinese authorities.
