Debate: The trade-related extraterritorial effects of third countries’ sanctions
Date: MONDAY, 14 DECEMBER 2020
Speaker: Mairead McGuinness
Language: EN

It’s very true, as you’ve outlined, that in recent years, sanctions by third countries have caused severe adverse economic effects on certain EU economic operators who are conducting legitimate activities, and this is the case in relation to US sanctions against Iran, Cuba and Russia, and these concerns have been raised at the very highest level, including with the statement of High Representative / Vice-President Borrell on 17 July. Outreach with the US administration and Congress has also increased. These developments have shown the need for action, and the European Union is taking steps to increase its resilience against extra-territorial sanctions. First, the EU has revived its instrument against the extra-territorial application of third-country sanctions. The blocking statute already referred to was adopted in 1996 and amended in 2018 after the US withdrawal from the Joint Comprehensive Plan of Action and currently applies to US sanctions against Cuba and Iran. It prevents the enforcement of respective US legislation, including US judgements or decisions based on these sanctions regimes, and furthermore it allows EU economic operators to recover resulting damages. The Commission published guidelines on the blocking statute in 2018, and further guidance will be published early next year. As regards Cuba, the Commission is monitoring closely the situation following the reactivation of Titles 3 and 4 of the Helms-Burton Act. It provides support to EU economic operators in coordination with Member States and issues guidance. In relation to Iran, the Commission is supportive of the instrument in support of trade exchanges (INSTEX), an initiative of three countries initially – Germany, France and the United Kingdom – and more recently joined by Belgium, Denmark, the Netherlands, Norway, Finland and Sweden. Its objective is to facilitate payments for legitimate trade between the European Union and Iran. While not a new instrument, INSTEX is an important answer to the US sanctions which caters for the needs of EU financial operators. The Commission is studying the operations and progress of INSTEX to gauge whether it could serve as a blueprint for a similar initiative at Union level. The Commission is developing additional proposals to ensure that Europe is more resilient to third countries’ extra-territorial sanctions. We will in early 2021 have a communication on strengthening the Union’s open economic and financial autonomy. It will put forward measures to reinforce the EU’s toolbox against extra-territorial sanctions, including the blocking statute. It will also contain proposals to strengthen the resilience of key EU financial market infrastructures to extra-territorial sanctions. These measures are not directed against any third party; they are part of the Union’s larger efforts to promote its open strategic autonomy, which is understood as reducing dependencies and enhancing multilateralism and the EU’s resilience, including against the effects of extra-territorial sanctions on EU operators. Overall, the EU values close coordination on sanctions with international partners, including in the pursuit of shared objectives. Where differences exist, the EU is ready to engage through a frank and open dialogue, to avoid unintended consequences on EU operators. I look forward to listening to the debate here this evening. I want to thank you for having this on your agenda. It is a very serious issue for us, and I believe that next year we will make progress on addressing this in a wider framework.