A proposed EU law would allow rapid retaliation against economic sanctions imposed by countries such as China and Russia, but it has met with resistance from some member states.

The anti-coercion instrument will give the European Commission broad powers to impose tariffs and quotas, restrict intellectual property protection and even exclude the country from the EU financial market.

But some countries worry that the regulation may violate WTO Rules, increase protectionism and undermine the fragile trading system.

The plan must be supported by most EU member states and the European Parliament to take effect.

A sort of Draft proposal The Financial Times, which was approved by the committee on Wednesday, said the tool would prevent countries from targeting member states.

Officials say it can be used in disputes between two parties China and Lithuania, It said Beijing blocked all imports because of its policy on Taiwan. Lithuania allows Taiwanese representatives to open in November; China treats Taiwan as part of its territory.

Under the new law, the committee will be able to react quickly. If the negotiation with the other party does not solve the problem, 12 possible countermeasures can be taken with the approval of the member states.

These include imposing tariffs; prohibiting the import of chemicals; suspending scientific cooperation; and “restrictions on banking, insurance, access to the Union’s capital markets, and other financial service activities.” These measures may target companies or individuals.

The committee’s proposal defines economic coercion as “through the application or threat of application of measures that affect trade and investment, seeking to force alliances or member states to make specific policy choices.”

“The continuous and extensive use of economic coercion by third countries may damage the rights and interests of the alliance and member states,” it added.

The use of trade policy instead of foreign policy provides the committee with more leeway. The regulation and any actions taken under it only require a qualified majority of the member states to become law, rather than unanimous consent, which is necessary for foreign policy tools.

Possible triggers include Russia’s boycott of EU products in 2014, after the group imposed sanctions on the downing of a Malaysian Airlines flight over Ukraine for the first time.

The committee also cited Indonesia’s effective ban on EU spirits imports in 2019 as a trigger in response to the EU’s actions in response to the issue of palm oil production that has led to deforestation.

However, some member states believe that the WTO is more effective than unilateral actions. According to diplomats, Sweden, the Czech Republic and Estonia all question the need for the plan, while Finland and Italy are skeptical.

Several other countries, such as Germany, Denmark and Ireland, are waiting for them to see the proposal before approving it.

Japan It has publicly opposed it, saying that the instrument may violate WTO rules. This is a concern for some EU capitals.

In response to the consultations, Estonia requested that “the proposed instrument must be in full compliance with WTO rules.” The Committee should also assess “in addition to the cumulative negative impact on the EU’s liberalization of terms, the possibility of exacerbating trade disputes, incurring retaliation from our trading partners, and harmful effects on the rules-based multilateral trading system”. trading”.

Sweden and the Czech Republic stated in a joint document submitted to the committee that any retaliation should be a “last resort”. They also warned that such measures may hit the EU’s own companies, thereby causing more harm than good to the EU. “The full participation of member states in decision-making is crucial,” they said.

The diplomat said that the United States also has concerns. Washington declined to comment.


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