Jacques Delors Institute. Remarks by HR/VP Josep Borrell at seminar on Extra-Territorial Sanctions

Thank you for the invitation and for the important contributions that the Jacques Delors Institute has been making, under the leadership of my friend Pascal Lamy. I appreciate your work on EU foreign policy in general and all the papers you are publishing.

I want to be clear upfront on the subject of today’s debate: the EU has always been firm and vocal in condemning any extraterritorial application of sanctions. We also oppose the growing use of secondary sanctions, as well as the use of sanctions as a trade and economic tool. For the EU, sanctions are exclusively a foreign policy tool. And in any event, they must respect international law. 

You know we are concerned about US sanctions against European companies and interests, such as in the cases of Iran, Cuba, the International Criminal Court and the Nord Stream 2 (although we have seen positive steps on this) and Turkstream projects. At all levels, we consistently share our concerns with US counterparts and call for a reversal in the application of extraterritorial sanctions.

I do want to underline that our cooperation on sanctions has improved a lot with the new US administration and we have managed concrete progress. I would cite recent coordination on Nordstream 2, Russia, Belarus, Myanmar, Venezuela – just to mention a few. And the fact that the US has now repealed its sanctions against the International Criminal Court is certainly a good sign. Lets recognise the changes since the Trump administration.

At the EU-US Summit in June, we committed, and I quote: ‘to enhance cooperation on the use of sanctions to pursue shared foreign policy and security objectives, while avoiding possible unintended consequences for European and US interests’. More dialogue with the US is essential to make progress on the issues we are discussing today. I believe we have the best opportunity we have ever had with the current US administration.

This issue is of course not confined to the US only; other international players, such as China are gearing up for extra-territorial sanctions and the EU must be able to react to that. 

 In fact, the issue of extra-territorial sanctions is part of a growing global phenomenon affecting the autonomy and sovereignty of the EU. In recent years, there has been an increasing number of examples of foreign countries seeking to influence the decisions or behaviour of the EU or EU member states in the area of trade and investment policy. We must respond to these attempts by deploying a combination of tools (diplomatic, political, legal, economic and financial) to prevent these activities and to mitigate their effects.

This is why, in January 2021, we outlined in a Communication a number of parallel actions to strengthen the EU’s ‘open strategic autonomy’ and to increase the resilience of the EU economy and financial markets to protect ourselves from any unfair and abusive practices.

One important strand of this strategy focuses on promoting the international role of the euro as well as on strengthening the EU’s financial market infrastructure. This is something you rightly mention in your paper.

Another strand aims at improving the implementation and enforcement of the EU’s own sanctions regimes.

And the third strand is about increasing the EU’s resilience to the effects of the extra-territorial application of unilateral sanctions by third countries.

For example, the EU is working to overhaul the so-called “Blocking Statute” that protects EU operators, by nullifying the effect in the EU of any foreign court ruling based on the foreign laws. We want to modernise the Blocking Stature and simplify its application, including by reducing compliance costs for EU citizens and businesses.

The Commission is also working on a so-called “anti-coercion” instrument. This would empower the Commission to apply trade, investment or other restrictions towards any non-EU country that is unduly interfering in the policy choices of the EU or its member states. The goal is to deter or offset such coercive action, in line with international law.

Let me conclude: we know that we need to look more actively to protect our economic operators from the effects of extraterritorial sanctions and other measures. There is no magic solution, but the different initiatives we are taking reinforce each other and can make a real difference.

I welcome this debate and the proposals put forward in your paper. Some go in the same direction as the EU initiatives that I mentioned. Others go beyond current EU initiatives. But they are interesting ideas on which it is worth reflecting, for example the creation of European Office of Foreign Assets Control or a European External Trade Bank. Yet others are far-reaching and it would be interesting to hear more about them to understand how they could work in practice.

One thing is clear: while we must defend the interests of the EU and it operators, we should always do that in full respect of international law. Our sanctions respect international law. We must not counter extra-territoriality with extra-territoriality.