French President Emmanuel Macron told EU leaders to consider using the bloc’s most powerful trade tool against China if they are not able to find a resolution to Beijing’s planned export controls on critical rare earths.
Macron said they need to weigh using all options available against China, including the EU’s so-called anti-coercion instrument (ACI), people familiar with the matter said.
He made the statement to his counterparts during a leaders’ summit in Brussels on Thursday, the people said.
Photo: AFP
“This is economic coercion,” Macron told reporters after the summit, referring to the Chinese announcement on rare earths, without commenting on the specifics of the closed-door conversation.
“We can see the impact it is having on us and we need to be able to respond,” he said.
China announced plans to significantly tighten controls on its exports of rare earths and other critical materials earlier this month. Under the measures, overseas exporters of items that use even traces of certain rare earths sourced from China would need an export license.
The export restrictions would pose a massive threat to Europe’s industry and security, as the inputs are critical across sectors and used in everything from electric vehicle batteries to defense manufacturing.
Following the summit, German Chancellor Friedrich Merz confirmed that the ACI was discussed, but that no decision had been reached on using it. He said it was now up to the European Commission, which handles trade matters for the EU, to decide whether to deploy the ACI.
The ACI, which has never been used, was designed primarily as a deterrent, and if needed, to respond to deliberate coercive actions from third countries that use trade measures as a means to pressure the policy choices of the EU or its members.
Those measures could include tariffs, new taxes on technology companies or targeted curbs on investments in the EU. They could also involve limiting access to certain parts of the EU market or restricting Chinese firms from bidding for public contracts in Europe.
The instrument was created as part of the EU’s effort to boost its trade defenses after the US imposed tariffs on the bloc’s exports during the US President Donald Trump’s first administration.
Another factor was China’s decision to place restrictions on Lithuanian goods after Taiwan opened a trade office in the nation.
Use of the EU’s most potent trade tool is unlikely at this stage as it would significantly escalate tensions with China. France has called for using the instrument before, including during trade talks with the US, but the drive never fully gained traction.
The European Commission is working on options that it could use if a diplomatic solution with China is not found. It is preparing a list of trade measures by the end of the month that can later be deployed against China to boost its negotiating leverage on the issue, Bloomberg reported earlier.
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