European Commission Moots New Economic Security Strategy Amid Trade War


Geopolitics is redrawing trade and shipping fleets. (Photo: Shutterstock/Printextar)

The European Commission unveiled a new strategy aimed at enhancing European economic security as well as, protecting technology supply chains from ‘foreign influence’. The 14-page paper submitted to member states and the European Parliament for debate on Wednesday, will be discussed for the first time by heads of state and government at the European summit on 29 and 30 June.

The policy claims to acknowledge the risks and vulnerabilities that have emerged in recent years, especially cyber threats as well as geopolitical tensions. The “risks resulting from economic ties we took for granted in the past” must be reduced, the text reads. In the face of evolving risks EU now wants to screen outbound investments of European companies for security loopholes with targeted technologies including AI, quantum computing, and advanced semiconductor tech. However, it is reported that the Commission wants a list of technologies considered crucial for the EU’s economic security to be drawn up.

The strategy’s key concern is the potential disruption caused by highly concentrated supply chains, whose fragility and impact on the European economy was exposed by the pandemic. Although the document does not mention China and other competitors, the EU seem to now want to divorce itself from growing economic reliance on Russia and China, countries which they especially now deem to have divergent values and interests.

Commissioner Margrethe Vestager stressed that the objective is not to decouple Europe’s economy but to reduce risks associated with supply chain dependencies. The concern lies in the potential weaponization of economic interdependencies by third countries. The challenge lies in determining which technologies, infrastructure, and services could pose a risk to national security if supply chains are disrupted or exploited, including intellectual property that could be used against the European Union or its allies.

EU Commission president Ursula von der Leyen © PHOTO KENZO TRIBOUILLARD / AFP
How Did They Get Here?

European countries have been dealing with these issues individually for years. Notably, efforts have been made to remove Huawei equipment from European telco networks due to concerns over the vendor’s ties to the Chinese government. Failure to eliminate this equipment has been warned to put the entire European Union at risk.

Recent US sanctions on the Chinese semiconductor industry have drawn attention to Chinese investments in European tech companies and raised concerns about intellectual property theft. The suspicion that a former ASML employee accused of stealing trade secrets was a Chinese spy has further intensified these concerns. ASML is the sole provider of extreme ultraviolet (EUV) lithography technologies used in advanced chip production. The sale of such equipment to China has been blocked by the Netherlands under pressure from the US.

The policy focuses on three main priorities. Firstly, promoting Europe’s own competitiveness through measures like deepening the Single Market, investing in future technologies, and upskilling the workforce. Secondly, protecting the EU from economic security risks by leveraging existing tools such as trade defense mechanisms, foreign subsidies regulations, and export controls, and by introducing new instruments to counter economic coercion. Finally, the strategy highlights the importance of partnering with countries that share concerns about economic security, fostering resilient value chains, and strengthening the rules-based economic order.

Moving forward, the European Commission’s strategy will be subject to discussions with Member States and the European Parliament to establish a common framework for de-risking and protecting the EU’s economic security. The exact terms of the EU strategy are yet to be finalized. The Commission plans to delve deeper into the plan later this month, aiming to adopt the rules by September and complete risk assessments by year-end. This communication serves as a starting point for these discussions and will guide the assessment of risks, utilization of existing tools, and identification of potential gaps in the EU’s economic security arsenal.


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