Friday, July 1

The EU arms itself against trade wars in full swing with China

  • The Commission designs a legal framework to respond to boycotts and threats of tariffs

  • The ‘Anti-coercion Instrument’ contemplates disavowing foreign products and limiting access to the European market

The European Union (EU) she has grown weary of the threat of a trade boycott waving before her without having a strong form of response. Faced with this situation, and with relations with China considerably tense, Brussels has presented a proposal for an instrument to be able to disallow foreign products, restrict intellectual property rights, investments or even limit access to the European market to countries with whom there is conflict.

It is a tool that they have called Anti-Coercion Instrument (AIC) and that is emerging as a legal framework that will shield the EU in case it decides to undertake measures of this style in response to new tariffs, controls or restrictions on its trade abroad. The tool will be valid both for when the conflict is against the EU as a whole, and for when it affects a single Member State.

“It is not directed at a specific country,” said the Executive Vice President of the Commission and Trade Commissioner on Wednesday, Valdis Dombrovskis. “It is a horizontal instrument that can be used in reaction to different situations,” he added. Despite the nuance, he has responded to questions from the press that indeed the conflict between China and Lithuania justifies the existence of this tool.

According to a statement from the European Commission, the idea is that its mere existence will deter other countries from threatening these types of attacks when they want to force changes in European environmental or fiscal policies. Precisely, one of the great conflicts with the United States of Donald Trump was triggered as a result of the intention of the EU to tighten the fiscal regulation of the large North American technology multinationals.

The potential countermeasures, they insist from Brussels, would be applied “only as a last resort” when there is no other way to tackle the problem.

Beyond the diplomatic response

“At the moment, the EU does not have any instrument that specifically deals with coercion,” they say from this body. And without such a tool, they continue, “the Union and its Member States will resort to conventional diplomatic means, which are not always sufficiently effective.”

Today, the Commission does have the possibility of not renewing certain financial agreements or of opposing according to which investment operations, as long as a series of conditions are met, such as that the measure is temporary and proportional to the attack received.

Related news

However, with this new instrument, the EU could add to these measures actions on the goods or services offered by the country in question or its intellectual property rights. It could also introduce restrictions on access to the Community market (to public procurement, its capital, product authorizations, etc.) and research programs.

The AIC, it is explained in this same statement, responds to the requests of the European Parliament and from several Member States. The proposal, which has been drawn up “after in-depth public consultation at EU level”, will now need to be debated and approved by the European Parliament and the Council of the European Union.

Leave a Reply

Your email address will not be published.