| 17 April 2024, Wednesday |

EU to target export controls on military use goods, outbound investment risks

The European Commission intends to propose steps this year to address the security threats presented by outbound investments, as well as to strengthen export restrictions on commodities having both civilian and military applications, with a focus on competitors such as China.

The Commission puts out its views on how the European Union can make its economy more robust and anticipate new dangers in a paper titled “European Economic Security Strategy,” which Reuters obtained ahead of its presentation on Tuesday.

It said these could come from exports and investments that let know-how leak to foreign rivals in a “narrow set of key enabling technologies with military implication”, giving quantum computing, artificial intelligence, 6G, biotechnology and robotics as examples.

The European Union executive will present its “communication” to EU lawmakers and countries, whose leaders are set to discuss relations with China in Brussels next week.

The document does not name China, but stresses partnering with countries who share EU concerns and uses the phrase “de-risking”, its policy of reducing economic reliance on China.

The EU executive will need to tread carefully because granting of export licences and weighing security interests are national competences that EU governments will want to retain.

Dutch plan that effectively bars Chinese companies from buying the most advanced semiconductor-making tools of ASML (ASML.AS) is a case in point

The EU does control exports of specified “dual-use” goods that can have military applications. The Commission plans to produce a further list with EU members of technologies critical to economic security.

“EU member states are not ready to hand over export controls as a whole but we will probably see something more along the lines of greater cooperation,” an EU diplomat said.

The Commission will also have an eye on inbound investment and may propose a revision of its screening mechanism before the end of 2023.

EU diplomats say the bloc must determine carefully what risks it wants to limit and establish that they cannot be contained by existing measures.

The Commission document says it will focus on risks to supply chains, including energy, and to critical infrastructure, such as telecom networks, as well as guarding against economic coercion and leaking out of leading-edge technology.

  • Reuters