Europe Weighs Economic Countermeasures to Address China‘s Rare Earths export Controls
Brussels – Facing escalating restrictions on exports of rare earths and related products from China, the European Union is considering activating its Anti-Coercion Instrument (ACI) to compel Beijing into negotiations, according to a new analysis from the European Council on Foreign Relations (ECFR). The move comes as China’s expanded export controls threaten Europe’s defense industry, including support for ukraine, and its transition to green energy, placing critical supply chains under Beijing’s licensing authority.
The ECFR report,authored by janka Oertel and others,argues that accepting China’s coercive measures would establish a risky precedent.Rather, the EU should leverage its own economic tools to achieve a negotiated agreement based on the principle of mutually assured economic destruction – effectively an “economic disarmament treaty” where breaches trigger further escalation.
Proposed countermeasures outlined in the report include:
* Chip Controls: Restricting maintenance services for EU-manufactured DUV lithography tools currently operating in China.
* Aviation Restrictions: Limiting exports of aircraft engines and complete aircraft, impacting the over 2,000 European planes currently in service within China.
* Industrial Export controls: Targeting exports of high-precision bearings, gas turbines, and other specialized machinery essential to Chinese industrial production.
* Targeted Tariffs: Imposing tariffs on a range of Chinese exports, including steel, electric vehicles, wind turbines, telecommunications equipment, medical devices, and low-end consumer goods.
The goal is not to initiate a full-scale trade war, but to secure a political agreement with China that ensures fair access to critical materials and prevents future coercion.The resulting time gained would allow Europe to accelerate its efforts to decouple its industries from reliance on Chinese rare earths.
The ECFR analysis is available at https://lnkd.in/emFRxEpS.
