26 Jan 2021

Extraterritorial sanctions with a Chinese trademark

European responses to long-arm legal tactics

Steven Blockmans

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China has recently updated its laws on the (security) screening of foreign investment, promulgated a new export controls law, drawn up an ‘unreliable entity’ list, and adopted an EU-style statute blocking the extraterritorial jurisdiction of US law. Beijing wages legal warfare (‘lawfare’) against Hong Kong, in the South China Sea, along the Belt and Road, and in cyberspace. Given today’s global geopolitical contestation it is only a matter of time before the European Union feels the grip of the long arm of Chinese law. Historically, the EU Blocking Regulation has provided for a unified European response to the extraterritorial application of sanctions. However, the proliferation of such sanctions requires a deeper debate on possible additional measures to increase deterrence and, if needed, to counteract them. This paper asks how the EU might prepare to be better protected against such lawfare, and finds inspiration in the established practice of hedging against secondary sanctions, as adopted by the US Treasury Department.