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21st May 2022

EU plans new trade defence tool to deter economic coercion

  • 'We will not accept intimidation tactics that could jeopardise our key policies,' EU commission vice-president Valdis Dombrovskis said (Photo: European Commission)
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The EU Commission laid out plans on Wednesday (8 December) for retaliatory measures to hit countries putting economic pressure on EU member states to change their policies.

The commission was quick to say the planned tool is not directed at any specific country, and would be used as a deterrent.

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"The EU will stand firm in defending itself, EU will not hesitate to push back when we are under threat," commission vice-president Valdis Dombrovskis said.

"The weaponisation of trade for geopolitical purposes is a fact," Dombrovskis told reporters, adding that EU countries have been the target of both economic intimidation and coercion.

The tool would be used when one country pressures another into changing their policies, by restricting or threatening to restrict trade and investment.

The forms of pressure include possible explicit coercion against EU countries, twisting rules, selective border food-safety checks, and state-sponsored boycotts of goods of a certain origin.

If an issue comes up, the commission would assess the form of pressure - whether the intent is coercion, and if there is a clear systematic pattern of action by the non-EU country - and the level of interference.

The EU executive's first move would be dialogue and negotiations with the country concerned, and seek mediation or cooperation from other partners before taking action.

If those fail, it could use countermeasures, such as tariffs and duties, investment restrictions, public procurement restrictions, and curbing access to EU-funded programmes.

The counter-measures are planned to be proportionate and designed to make the country stop its actions but - also - to cause the EU the least amount of economic damage.

"We will not accept intimidation tactics that could jeopardise our key policies," Dombrovskis said.

The move comes against a backdrop of China pressurising Lithuania, after Vilnius let Taiwan set up a de facto embassy there.

China downgraded its diplomatic relations with the small Baltic state and Beijing has also imposed blocks and pressured companies in third countries not to do business with it.

The commission vice-president said cases like this could be a "reason to do an assessment whether it constitutes 'economic coercion'".

China denies putting pressure on Lithuania for political reasons.

The commission's proposal will need to be approved by the European Parliament and EU governments.

France, which will hold the rotating EU Council presidency from January supports the plan, but, for instance, Sweden is more reluctant and sees it as potentially protectionist.

Other member states, meanwhile, are worried that it would effectively give the commission the right to impose sanctions.

"But we cannot allow this [the EU's] openness to be used to blackmail us or to restrict our policy space. Europe must stand up against trade bullies," centre-right MEP Christophe Hansen said of the proposed measures, adding that he does not want the tool to lead to a "global trade arms race".

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