French President Emmanuel Macron told European Union leaders to consider using the bloc’s most powerful trade tool against China if they aren’t able to find a resolution to Beijing’s planned export controls on critical raw materials.
Macron said they need to weigh using all options available against China, including the EU’s so-called anti-coercion instrument, according to people familiar with the matter.
He made the statement to his counterparts during a leaders’ summit in Brussels Thursday, said the people, who spoke on the condition of anonymity. The French presidency didn’t respond to a request for comment.
‘See the impact it has on us’: Macron
“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.”
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 anti-coercion tool 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 tech 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 first Trump administration. Another factor was China’s decision to place restrictions on Lithuanian goods after Taiwan opened a trade office in the Baltic 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 commission is currently working on options that it could use if a diplomatic solution with China isn’t found.
The commission 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. The commission is also developing a plan to protect critical supplies in the short-term and secure other sources.
The EU’s trade chief Maros Sefcovic held talks with his Chinese counterpart, Wang Wentao, earlier this week on the proposed export restrictions.
“We have no interest in escalation,” Sefcovic told reporters after the call Tuesday. “However, this situation casts a shadow over our relationship, therefore a prompt resolution is essential.”
