Morning Trade: Extraterritorial sanctions

PASCAL LAMY: EUROPE SHOULD GET TOUGHER ON EXTRATERRITORIAL SANCTIONS: There’s growing political support, especially in France and Germany, for the idea that the European Union should be more effective in countering extraterritorial sanctions from the United States in order to be able to trade independently with countries such as Iran or even China, where the U.S. might in the future impose more sanctions and export restrictions.

But there’s a very basic practical question. Even if France and Germany got their EU colleagues on board, how could the EU counter U.S. sanctions? In an exclusive paper shared with Morning Trade readers, trade experts from the Jacques Delors Institute think tank in Paris, Berlin and Brussels outline their recipe.

Europe needs “a combination of general protection measures such as reversing the blocking statute, and of case by case countermeasures, such as EU entry prohibitions or financial passport removal,“ said Pascal Lamy, the former EU trade commissioner and World Trade Organization’s chief, one of the authors.

Setting boundaries: One of the strongest proposals would be to prevent American officials “who have made extraterritoriality their preferred weapon” from entering the European territory.

Retaliating: The authors also propose excluding companies registered in the country which issued sanctions from the EU’s public procurement market. The proposal comes in a moment in which EU countries are close to agree on new rules on public procurement.

Same under Biden: The authors warn against the risk of underestimating the issue and expecting the new Biden administration to go softer than the previous one on extraterritorial sanctions. “To do so would ignore the steadfast choice the United States has made time and time again in favour of extraterritoriality … irrespective of its head of state,” the paper argues. 

Link to the Politico Trade newsletter