Chinese trade restrictions against Lithuania are a possible application of the now agreed regulation.
(Photo: dpa)
Brussels The EU is increasing its readiness to defend itself in trade conflicts. On Tuesday, the 27 member states and the European Parliament agreed on a new instrument with which Brussels can react faster and more severely to economic sanctions from third countries.
The so-called “instrument against coercive measures” is primarily intended to serve as a deterrent. Other countries should not even dare to restrict trade with the EU or individual members, because otherwise they would face severe counter-sanctions. The law is essential to prevent economic intimidation by third countries, said EU Commission Vice President Valdis Dombrovskis.
Possible sanctions include punitive tariffs and export restrictions. But the EU can also remove intellectual property protection or restrict access to European financial markets.
“Trade policy is increasingly being used as a political weapon,” said the chairman of the Trade Committee in the European Parliament, Bernd Lange (SPD). “We are vulnerable and there are states that want to exploit this vulnerability with the threat of coercive measures.”
Sometimes it is necessary to put a gun on the table. The new instrument is “not a water pistol, but a real weapon”.
New counter-sanctions are intended to deter China
The law is primarily aimed at China, even if the country is not explicitly mentioned. Most recently, the regime in Beijing imposed an economic blockade on Lithuania because the Baltic state had allowed Taiwan to open a diplomatic mission under the state name in 2021. China regards Taiwan as part of its national territory and wants to prevent international recognition of the island republic in any form.
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China has since blocked shipments of Lithuanian goods. Goods from other EU countries are also affected if they contain Lithuanian parts. The EU Commission immediately condemned the Chinese blockade and filed a complaint with the World Trade Organization (WTO).
From the point of view of the Europeans, however, the WTO rules are not sufficient to ward off such attempts at economic blackmail by foreign states. With the new instrument, the EU could effectively fight back in the future, explained Lange. There are many examples of states using foreign trade for political purposes. In addition to China, he also named “our great ally the USA”, which had threatened punitive tariffs if the EU were to introduce a digital tax.
Counter-sanctions should take effect after a maximum of one year
However, the reaction of the Europeans would not be particularly quick in the future either. In the event of a conflict, the Commission should first check whether the EU or a member state is in a forced situation. You have up to three months to do this. Thereafter, possible counter-sanctions can be debated for up to six months before the Council of Member States decides by qualified majority. The qualified majority means that at least 15 states with at least 65 percent of the total population must agree.
It should take a year at most for the counter-sanctions to come into force, said Lange. He hopes, however, that things will go faster in an emergency. The European Parliament had insisted on clear deadlines in the negotiations. The member states, on the other hand, have asserted that they have the last word on possible sanctions.
Many governments are skeptical about an escalation of trade conflicts if their own economy suffers as a result. They therefore did not want to leave it up to the Commission to decide what counter-sanctions to take.
Companies that are affected by such a trade conflict are to be compensated in the future. The exact details are still being worked out. Lange emphasized that the new instrument was purely defensive. The sanctions are only a last resort if all direct talks with the trading partner have failed. “We’re not looking for confrontation, but at the end of the day we have to be able to defend our economic interests,” said the SPD politician.
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