The European Commission is set to propose measures aimed at mitigating security risks associated with outbound investments and strengthening export controls on goods with both civilian and military uses. These plans, driven by concerns over emerging rivalries, particularly with China, aim to enhance the resilience of the European Union's economy.

THIS ARTICLE IS WRITTEN BY CEM ADIYAMAN. CEM ( [email protected]) HAS A STRONG FOCUS ON LAW & TECHNOLOGY WITHIN RSM NETHERLANDS BUSINESS CONSULTING SERVICES. 

The European Commission is set to propose new measures aimed at addressing security risks associated with outbound investments and reinforcing export controls on goods with both civilian and military applications. The proposed strategy, titled "European Economic Security Strategy," emphasizes the need for the European Union (EU) to enhance its economic resilience and identify emerging risks, particularly in key enabling technologies with military implications such as quantum computing, artificial intelligence, 6G, biotechnology, and robotics. The plan is also driven by concerns over economic reliance on China and the need to de-risk EU economies. This development comes in the wake of the Dutch government's decision to restrict exports of semiconductor technology to China, aligning with the United States' efforts to curb chip exports to China.

Why did the Commission propose new plans, shifting momentum? 

The European Commission's new economic security strategy represents a notable departure from the EU's long-standing free-market ideals. The evolution of geopolitical dynamics and intensified U.S.-China competition have compelled the EU to re-evaluate its approach. Previously, the bloc sought to separate its liberal trade policy from foreign politics. However, recent events, including Russia's aggression in Ukraine and instances of economic coercion, have highlighted the vulnerabilities of the EU's supply chains and dependencies. The EU now aims to assert itself as a player rather than a pawn in the global landscape. National security concerns have surged to the top of the European agenda, necessitating a recalibration of economic strategies to safeguard European interests and enhance economic security.

The view of the Netherlands 

The Dutch government's decision to restrict semiconductor tech exports to China aligns with the broader EU approach. The move marks the Netherlands' response to U.S. calls to limit chip exports to China and serves to protect national security interests. The announcement highlights the pivotal role played by the Netherlands in overseeing essential chipmaking technology and emphasizes the need to prevent advanced technologies from falling into the wrong hands. While the decision does not explicitly name China, it affects key Dutch trading partners and European tech giant ASML. The introduction of new restrictions underscores the Dutch government's commitment to promptly regulate the export of critical technologies and minimize potential disruptions to value chains.

What's Next?

The European Commission's economic security strategy is an important step toward mitigating security risks and protecting EU economic interests. The proposed measures aim to foster resilience, reduce dependencies, and guard against economic coercion. To ensure effective implementation, the EU will enhance coordination among member states, particularly in areas such as export controls and screening of investments in strategic sectors. It is essential to strike a balance between protecting economic security and maintaining competitiveness in a rapidly evolving global landscape.

As an individual or organization, there are several actions you can take to align with the EU's economic security goals:

  1. Stay informed: Although this may seem obvious, it is probably the most important thing you can do as an organization. Keep abreast of developments in emerging technologies and their potential implications for economic security. Understanding the risks and challenges associated with specific sectors will enable you to make informed decisions.
  2. Assess supply chains: Evaluate your supply chains and identify potential vulnerabilities. Diversify suppliers and reduce dependencies on single sources to enhance resilience and minimize the risk of disruptions. Are you a supplier yourself? Make sure you are prepared to talk to fellow suppliers or the buyer in order not to be hindered.
  3. Collaborate and Cooperate: Engage in partnerships and collaborations with like-minded countries and organizations that share the EU's concerns regarding economic security. Joint efforts can strengthen resilience and promote collective action against potential threats.

Concluding remarks:

The European Commission's proposal for an economic security strategy signifies a paradigm shift in the EU's approach to safeguarding its economic interests. The strategy acknowledges the inextricable link between economic and national security and seeks to address emerging risks associated with critical technologies. As the EU endeavours to reduce dependencies and protect against economic coercion, a careful balance must be struck to maintain competitiveness and foster innovation. By staying informed, assessing supply chains, collaborating with stakeholders, investing in R&D, and advocating for effective regulations, individuals and organizations can contribute to the EU's broader efforts to enhance economic security and ensure long-term prosperity.