EU will propose new trade weapon to counter China’s economic coercion

The European Union is set to unveil a powerful new trade weapon that could result in China and other countries accused of economic bullying being shut out of lucrative parts of the EU market.

The anti-coercion instrument will target states that try to “interfere in the legitimate sovereign choices” of the EU or one of its 27 member states “by applying or threatening to apply measures affecting trade or investment”, according to a draft proposal seen by the South China Morning Post.

It lays out a large range of punitive actions the EU can take when it is satisfied that coercion is taking place, including tariffs, suspension of market access through the use of quotas or trading licences, and restricted access to public procurement programmes and investment markets.

The move comes as the issue of coercion has been thrust to the top of the EU-China agenda with the spat between Lithuania and China, in which Beijing has been accused of blocking Lithuanian exports after the Baltic nation expanded its ties with Taiwan.

According to the draft proposal, those found to be involved in coercion could be blocked from sourcing goods governed by EU export control guidelines, have their intellectual property rights truncated, be excluded from the bloc’s giant financial services or chemicals sectors, or face sanitary or phytosanitary barriers to tapping the EU’s food markets.