If the European Commission had needed proof that the EU needs a new instrument to defend itself against economic blackmail by third countries, China will provide it these days.
Since the EU member Lithuania allowed the opening of a “Taiwanese” representative office in Vilnius in August, the mood between the two countries has been tense.
Beijing sees this as a violation of the one-China principle that Taiwan is part of China.
After the office actually opened in November, Beijing is now blocking imports of goods from the Baltic state.
Trade Commissioner Valdis Dombrovskis did not have to think twice on Wednesday when he was asked for examples of where the EU's proposed new anti-extortion instrument could work.
Hendrik Kafsack
Business correspondent in Brussels.
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So far, the EU has found it difficult to respond to such blackmail attempts by third countries.
As always in foreign policy, the EU treaties require the unanimous consent of the member states to impose sanctions.
That, in turn, is often impossible to achieve.
Especially when it comes to China, individual heads of state and government such as the Hungarian Prime Minister Viktor Orbán have often vetoed EU resolutions.
Therefore, according to the proposal, the decision on the use of the anti-extortion instrument should largely be left to the Commission.
The states should only be able to prevent it if there is a qualified majority in the Council of Ministers against it.
Dombrovskis clarified that the prerequisite for the application of the instrument is that a state uses economic means to prevent unpleasant decisions from the entire EU or from a member state.
It is not about defending oneself against protective tariffs imposed for economic reasons like in the trade dispute with the USA.
Such cases are to be further clarified before the World Trade Organization (WTO) in Geneva or within the framework of the existing trade agreements.
“Economic blackmail” of states?
The instrument could, however, be applied to the tariffs threatened by Washington on French products in order to prevent the introduction of a digital tax. Unlike other proposals of the past few months, the initiative is not primarily directed against China, but also against the USA, Russia and other countries. "We are currently seeing a real geopolitical trend to use trade policy as a weapon," said Dombrovskis.
It remained unclear to what extent extraterritorial sanctions, such as those imposed by the USA on the companies involved in the construction of Nord Stream-2, were included, as these did not directly aim to put the federal government under pressure.
The instrument is explicitly not intended to protect individual companies from “blackmail” by third countries.
Ultimately, the commission had to decide on a case-by-case basis whether there could be talk of “economic blackmail” of states, said the trade commissioner.
This could take various forms.
They range from the open threat of tariffs to the deliberately slow clearance of goods at the border to state-organized calls for a boycott of goods.
Warning of abuse
The range of countermeasures that the Commission can take in response include traditional trading instruments such as tariffs. According to the proposal, the Commission can also prevent access to the internal market, prohibit investments and public tenders or refuse the authorization of products in accordance with the applicable EU health standards. Before that happens, however, the Commission must give the affected state the chance to react and take the threatened steps back. Dombrovskis made it clear that it is all about deterrence. Above all, the instrument is a success when it is not needed at all.
Before the Commission can use the new instrument, the European Parliament and the Council of Ministers, the body of the EU states, must first deal with it. The proposal can only come into force if both institutions agree. The chances are good. The move met with broad support in the European Parliament on Wednesday. "There is a great willingness in the European Parliament to work constructively and quickly to ensure that the new protective instrument becomes a reality," emphasized the EU MEP for the Greens, Reinhard Bütikofer. The chairman of the trade committee Bernd Lange (SPD) spoke of a "license to fight back". The EU must face the unpleasant geopolitical realities. They have a gap in their instruments and are therefore open to attack. "We have to create an instrument that attempts todividing the EU apart, excludes from the start, ”emphasized Lange.
Germany and France have already indicated their support in advance.
The Scandinavian countries, Ireland and the Czech Republic, on the other hand, warn that the instrument could be misused to seal off the European market.
Dombrovskis denied this suspicion.
The anti-extortion instrument is intended solely for defense against states that have acted outside the framework of applicable international trade law.