Europe Is Building the Weapon It Once Called Illegal

I

In 1987, the United States launched a Section 301 investigation into the European Community. In 1989, based on that investigation, Washington imposed retaliatory tariffs on the EC. In December 1998, the United States again invoked Section 301 to impose unilateral sanctions totaling $520 million on imports from the EU, including handbags and cashmere wool products.

At the time, European leaders called the measures "illegal," "bullying," and "a blow to the rules-based multilateral trading system." The European Community brought a case at the WTO and insisted on one principle: trade disputes should be resolved through multilateral mechanisms, not unilateral sanctions.

More than three decades later, some EU member states are pushing the European Commission to create an "EU version of Section 301."

China's Ministry of Commerce responded with eight words: "Do not impose on others what you yourself do not desire."

That sentence carries weight only when placed against the history above.

II

According to reports, Germany and France are finalizing a joint document that calls on the European Commission to accelerate work on such a tool. The document is expected to be approved by French President Emmanuel Macron and German Chancellor Friedrich Merz before it is submitted to European Commission President Ursula von der Leyen. One EU official said the document is "basically finalized" and that "we are making good progress." He added: "The tool we are calling for would allow us to exclude China from the European market within 24 hours."

Twenty-four hours.

The number sounds absolute. It suggests an instant, irreversible cut. It also exposes a problem. If excluding China can be done within 24 hours, then the blowback can arrive within 24 hours too. Europe depends on Chinese goods. China depends on European technology, equipment, and services. Those are two sides of one coin. Cutting the coin in half hurts both sides.

The tool itself is not new. In 2023, the EU established the Anti-Coercion Instrument (ACI), which outsiders called a "trade bazooka." It can use tariffs, quotas, export controls, and market access exclusions. But it has a safety valve: activation requires at least 15 member states (55 percent) representing at least 65 percent of the EU's population. This is the "positive qualified majority" principle.

Germany and France want to flip that threshold. Under the proposed reform, unless opposing member states can muster a qualified majority to block a measure, the European Commission can activate the instrument on its own. The logic would shift from "a majority must agree before action" to "a majority must oppose in order to stop it."

That is a fundamental change in decision-making.

III

The EU is considering this shift because the current mechanism is slow.

Under normal EU procedures, imposing tariffs requires member states to vote by qualified majority. In peacetime, this design protects the balance of interests among member states. In a trade war, it means a long process of assessment, consultation, voting, and negotiation between identifying a "threat" and taking action. The Anti-Coercion Instrument is especially slow. The Commission must complete an assessment within four months. Member states then decide by qualified majority whether to activate it. If they activate it, a negotiation phase follows.

The EU knows its own efficiency gap. In electric vehicles, it was slow on pure battery EVs. By the time it noticed that Chinese hybrid vehicles had captured a large share of the European market, the policy window had narrowed. That anxiety, that "by the time we figure it out, the market is gone," has been building in Brussels, Berlin, and Paris.

But the EU's decision-making is complicated because it is made up of 27 sovereign states. Streamlining the chain also weakens member states' checks on trade policy.

Here is a structural risk that is easy to miss.

EU administrative bodies follow a "big rice bowl" model. Every member state can send someone to head a department. Some important EU departments can be dominated by small countries. Their decisions do not always align with the overall interests of France and Germany. They can even put national interest above the collective interest of the EU.

One example is 5G equipment. The EU vice-president for tech sovereignty, security, and democracy, Henna Virkkunen, is Finnish. Under her push, the EU has strongly promoted banning Chinese 5G equipment. One of the biggest beneficiaries would be Nokia, a Finnish company, alongside Ericsson. France and Germany had hoped to use 5G procurement as a bargaining chip with China. That plan was disrupted by Virkkunen's push.

If an "EU version of Section 301" is implemented, a similar problem would grow. A EU trade department led by officials from small countries, armed with an autonomous trigger under a "reverse qualified majority," can launch trade restrictions without consensus among major powers.

IV

From a legal perspective, the biggest challenge is the tool's relationship with WTO rules.

Shi Xiaoli, director of the WTO Law Research Center at China University of Political Science and Law, points out that the EU itself was a victim of the U.S. Section 301 investigation and related unilateral trade measures. It has repeatedly criticized unilateralism and protectionism. Now the EU is considering a similar tool to pressure other trading partners. "This policy shift deserves vigilance," she said. She added that if the tool mainly targets specific countries or products from specific origins, it will raise questions about compliance with the non-discrimination principle and WTO rules.

The WTO's most-favored-nation principle requires members not to discriminate against specific countries in trade measures. The core logic of Section 301, imposing targeted tariffs on a specific country's "unfair trade practices," is in tension with that principle. The United States has been able to use Section 301 for so long partly because a WTO dispute settlement ruling in 2000 rejected the EU's appeal to remove it. But that ruling is more than two decades old, and the trade landscape is different now.

Even if a technical legal basis exists, the political signal is clear. The EU would move from defender of multilateralism to practitioner of unilateral tools. When the MOFCOM spokesperson said that "if it cannot lead by example, but instead takes the lead in violating WTO rules, it will severely impact the rules-based multilateral trading system," that is the cost of this shift.

V

The direct motivation behind the EU push is its growing trade deficit with China. In 2025, the EU's goods trade deficit with China reached about €360 billion, roughly €1 billion a day. It was a record high. It was also the first time all EU member states ran a trade deficit with China. Von der Leyen described this as "the second China shock driving European deindustrialization."

That narrative ignores the real structure of China-EU trade.

Nearly half of China-EU trade is intermediate goods. European companies buy Chinese semi-finished products, process and upgrade them, and produce high-value final products sold globally. That value-added revenue does not appear in customs trade deficit statistics. Renault of France used the rapid-response mechanism and modular development philosophy of China's supply chain to shorten the development cycle of the Twingo E-Tech by one year and halve R&D investment. The model became competitive in Europe's sub-€20,000 pure EV market.

The EU also runs a long-term surplus in services trade with China, more than $50 billion in 2024. From intellectual property royalties alone, it earns more than $10 billion from China every year. The surplus is in China, but the profits are in Europe. That is the real picture.

The decline in European industrial competitiveness is real. Shi Xiaoli's analysis points to deeper causes: high energy costs, insufficient investment, a fragmented internal market, weak innovation, and slow industrial transformation. EU energy costs are two to three times those of the United States. Industrial project approvals take an average of one to three years, sometimes more than six. R&D investment has long been insufficient, and the EU has fallen behind China and the United States in technological innovation.

To blame these problems simply on competition from China is to treat an internal illness with an external remedy. Trade barriers can protect some industries in the short term. They cannot fundamentally improve the efficiency and innovation capacity of European industry.

VI

China's response to the "EU version of Section 301" is not just harsh diplomatic language. Behind the MOFCOM statement, an institutionalized countermeasure framework is already in place.

On May 15, 2026, China's Ministry of Justice issued an announcement invoking the Regulations on Countering Foreign Improper Extraterritorial Jurisdiction. It formally determined that the European Union's cross-border investigation of Nuctech under the Foreign Subsidies Regulation (FSR) constituted an improper extraterritorial jurisdictional measure. It ordered that "no organization or individual may execute or assist in executing the improper extraterritorial jurisdictional measure." This was the first time China activated this legal tool.

Three months later, in August, China acted again. In the EU's investigation into JD.com's acquisition of the German electronics retailer CECONOMY, the EU side "unreasonably demanded from relevant banking institutions within China a broad range of large amounts of China-related information unrelated to the investigation." China's Ministry of Justice, together with the Ministry of Commerce and other departments, again determined that this constituted improper extraterritorial jurisdiction.

The signal goes beyond individual cases. As an Economic Daily commentary noted, China's countermeasures are "not temporary responses to individual cases, but institutional arrangements to safeguard national and corporate legitimate rights and interests." As long as foreign rules and measures improperly extend into Chinese territory and harm the legitimate rights and interests of Chinese citizens, enterprises, or other organizations, China has the right to block them in accordance with the law.

In the context of the "EU version of Section 301," China's possible countermeasures include anti-discrimination investigations, industrial chain and supply chain security investigations, and foreign subsidy impact investigations. Used together, these tools give China the capacity to respond systematically to unilateral EU measures from multiple dimensions.

VII

The main drivers of the "EU version of Section 301" are France and Germany. They are far from unified within the EU.

Spanish Prime Minister Pedro Sánchez has opposed further escalation of trade measures against China. He described China as a "potential ally" of Europe. Spain has been actively seeking Chinese investment. The Netherlands is also skeptical of protectionism. Germany and Spain previously led opposition to a European Commission plan to exclude Chinese technology suppliers from European telecom network construction. It is estimated that forcibly removing Chinese supplier equipment would cost the EU more than $400 billion between 2026 and 2030.

"France and Germany cannot represent all European countries. Many European companies, including companies from France and Germany themselves, hope to build closer ties with China and find more development opportunities in the Chinese market," Zhou Mi, a researcher at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, told the Global Times.

Some German companies are already preparing for the worst. Before the second round of China-EU trade talks in late October, some German companies were panicking and beginning to stockpile rare earths in case the talks broke down. German industrial enterprises deeply embedded in Chinese supply chains understand better than politicians what a trade war would mean.

VIII

The MOFCOM spokesperson said that "holding dialogue and consultation with China while simultaneously escalating pressure on China will seriously undermine mutual trust and disrupt the overall consultation process." That points to a more fundamental problem: the EU says dialogue is the right way to resolve differences while preparing a weapon that can be used "within 24 hours."

The answer is not in trade policy. It has more to do with Europe's reexamination of its own position under competitive anxiety. Will it remain a beneficiary of open markets or become an operator of a closed one? Will it believe in the power of rules or worship the power of tools?

History has already given an answer. The EU was once a victim of U.S. Section 301. It knows what it feels like to be targeted by a unilateral tool. European leaders at the time angrily denounced those measures as "illegal" and "cruel." Now anxiety has replaced confidence. That anger is being forgotten. That lesson is being repeated.

"Do not impose on others what you yourself do not desire." That sentence from the East is worth more in Brussels than any trade clause.