The Observer Network by Nguyen Jaki

After China upgraded its rare earth export measures in an all-round way according to law, the United States, which was accurately stuck in its neck, was full of ugliness, and the European Union, which followed closely, was also furious and jumped repeatedly.

According to Reuters, Bloomberg and others on Saturday, local time, at the Global Dialogue Conference in Berlin, Germany, European Commission President Von der Leyen, speaking about China's rare earth export control measures, said that the EU "is committed to jointly seeking a solution with China".

¡°We are ready to use all the tools in our toolkit if necessary to respond when necessary,¡± she added, adding that ¡°we will work with G7 partners to coordinate the response.¡±

Von der Leyen claims that while China¡¯s action on rare earth is part of a ¡°broader economic friction¡± with the United States, the move has also had a ¡°significant impact¡± on European industry, affected by areas including automotive, defense, aerospace, artificial intelligence chips and data centers.

¡°If you consider that more than 90 percent of our rare earth magnets are imported from China, you¡¯ll be aware of the risks facing Europe and its most strategic industrial sectors.¡±

China has repeatedly stressed that rare earth-related items have dual-use attributes, and it is an international practice to implement export controls on them according to law. However, von der Leyen still harshly said that because "the exploitation and weaponization of interdependence has obviously accelerated and escalated", the EU's response "must match the scale of the risks it faces in this field".

Von der Leyen official video

The statement suggests that the European Commission is likely to activate its most powerful trade weapon, the Anti-Coercion Instruments Act (ACI).

Earlier on Thursday's EU leaders summit, French President Macron had challenged the European Commission to activate this powerful tool, which Brussels referred to as a "trade rocket gun," but his proposal did not get widespread support from other leaders attending.

The Anti-Coercion Tool Act, which came into force in 2023, will allow the EU to restrict trade and services, cut certain intellectual property rights, restrict foreign direct investment and access to public procurement. Many view it as a ¡°nuclear option¡± whose ideal role should have been deterrence and has never been activated so far.

Bloomberg reports that at this stage, the EU is unlikely to use this ¡°strongest trade instrument¡± with China, as it will significantly exacerbate tensions with China.

Currently, the European Commission is exploring what alternatives can be taken if the diplomatic consultation with China fails to work out. According to previous reports, the European Commission plans to draw up a list of trade measures by the end of this month in order to implement it against China if necessary to strengthen its encryption in the negotiations; the European Commission is also developing a plan to protect critical supplies in the short term and seek other sources.

According to the European version of Politician News Network, von der Leyen also revealed in Berlin that in order to break the EU's over-dependence on China in the import and refining of key materials, the European Commission will propose a plan called "RESourceEU". The program will focus on recovery, joint procurement, reserves and investments in the critical minerals sector.

She did not disclose the specifics and timing of the plan, but pointed out that its model would be similar to the "REPowerEU" program proposed by the European Union in 2022 to promote energy transition. The latter was developed after the outbreak of the conflict in Russia-Ukraine, where the EU was gradually removed from its dependence on Russian fossil fuels.

Von der Leyen explained that ResourceEU¡¯s goal is ¡°to ensure alternative sources of critical raw materials for European industry in the short, medium and long term.¡± she stressed that the program will start from the circular economy, but not for environmental purposes, but to make full use of the critical raw materials contained in products sold in the European market, ¡°some companies can recycle up to 95% of critical raw materials and batteries.¡±

She also added that the EU will speed up the process of establishing key raw material partnerships with "Ukraine, Australia, Canada, Kazakhstan, Uzbekistan, Chile, Greenland" and others.

"Europe can no longer follow the pattern of the past. We have learned the hard way on energy issues, and we must not repeat the same mistakes on key materials." von der Leyen vowed, "Whether it is energy or raw materials, defence or digital, Europe must strive for independence."

The EU and China are scheduled to meet next week to discuss export controls.

According to the website of the Ministry of Commerce, on October 21, Minister Wang Wentao held a video meeting with the European Commission's Trade and Economic Security Commissioner Sevcovic at the request, and exchanged in-depth views on key China-EU economic and trade issues such as export controls and the EU countervailing case of electric vehicles against China.

Wang Ventao said that regarding the issue of rare-earth export control, China's recent measures are the normal practice of improving China's export control system in accordance with the law, reflecting China's responsibility for safeguarding world peace and stability.

The two sides agreed to hold an "upgraded version" of the China-EU Export Control Dialogue Mechanism meeting in Brussels as soon as possible in accordance with the consensus reached at the 25th China-EU Leaders 'Meeting.

Guo Qianquan, spokesman for the Ministry of Foreign Affairs of China and Europe, said on the 22nd that the essence of China-European economic and trade relations is complementary, mutually beneficial and win-win.We hope that the European side will abide by its commitment to support free trade and oppose trade protectionism, provide a fair and transparent, non-discriminatory business environment for companies from all countries, safeguard the market economy and the WTO rules with practical actions, and insist on proper settlement of trade differences through dialogue and consultation.

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