The EU yesterday agreed to create a trade tool aimed at punishing countries that seek to put pressure on one of its member countries, after China targeted Lithuania.
The new weapon would allow the 27-nation bloc to impose tariffs, restrict investment and limit access to public contracts for nations seen as engaging in economic blackmail.
“This sends a strong signal that the EU rejects all forms of economic coercion,” European Commissioner for Trade Valdis Dombrovskis said. “We’ll be more assertive in defending our legitimate rights and interests.”
Photo: Reuters
The push to bulk up the EU’s economic muscle was given impetus by a row with China over trade restrictions imposed on EU member Lithuania after it strengthened ties with Taiwan. The EU has started action against leading trade partner China at the WTO over the restrictions.
Beijing has denied taking coercive measures.
The new instrument was agreed between EU member states and lawmakers after a year of negotiations. It is expected to enter into force later this year after it is formally approved by the European Parliament and 27 EU countries.
“It is one more tool at the service of our strategy for a less naive European trade,” French Minister Delegate for Foreign Trade, Economic Attractiveness and French Nationals Abroad Olivier Becht said.
Divisions between EU members have typically hampered the bloc from flexing its collective economic might on the international stage.
The tool now hands more powers to the EU executive arm, the European Commission, but unleashing the economic punishment would be only a last-ditch nuclear option if attempts at mediation fail.
In practice, EU member states would report complaints to the commission, which would have four months to rule if coercion is involved.
Any decision would then need to be signed off by a qualified majority of EU countries. If they agree, a mediation phase would begin during which the commission would seek to convince the third country involved to end its objectional measures.
Only if that does not work would the EU be able to resort to its new powers.
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