European Commission President Ursula von der Leyen said Brussels was considering all options to respond to China’s threat over rare earths.
“In recent weeks and months, China has dramatically increased controls on exports of rare earths and battery materials,” he told the Berlin Global Dialogue conference on Saturday, adding that this was a “significant risk”.
In her clearest statements since China’s announcement earlier this month of plans to curb rare earth exports, von der Leyen said that in the short term Brussels is focused on finding solutions with our Chinese counterparts.
“However, we stand ready to use all means at our disposal to respond if necessary. And we will work with our G-7 partners for a coordinated response,” he added.
Her remarks come days after French President Emmanuel Macron called on European Union leaders to consider using the so-called “anti-coercive instrument” — the union’s most powerful trade tool — against China if they fail to find a solution to the issue of planned controls on exports of critical raw materials from the Beijing.
This instrument, known as ACI, has never been used. It was designed primarily as a deterrent and, if necessary, a response to deliberate coercive actions by third countries using trade measures as a means of pressuring the policy choices of the EU or its members.
Von der Leyen also warned that while China’s move on rare earths is part of “broader economic friction” between the US and China, it has a “big impact” on Europe, noting that 90% of rare earth magnet consumption in the region comes from Chinese imports.
Europe is increasingly concerned about China’s restrictive trade measures. The EU is trying to protect its industries from excessive competition from subsidized Chinese products. Recently, Beijing also announced tough new controls on exports of rare earth minerals, which could put European industry at risk by accelerating its growing restrictions on foreign companies.