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The European Union is ready to retaliate against China’s export restrictions on rare earths, commission chief Ursula von der Leyen said in a hardline speech on Saturday. “In the short term, we are focusing on finding solutions with our Chinese counterparts. But we are ready to use all of the instruments in our toolbox to respond if needed. And we will work with our G7 partners on a coordinated response,” von der Leyen told the Berlin Global Dialogue conference. She also announced a new plan to counter the choke on rare earths that she said would focus on recycling, joint purchasing, stockpiling and investment. The speech comes amid a debate in the EU about whether the bloc should trigger its anti-coercion instrument – considered to be its most powerful trade weapon – against China for the controls, which have ground some production lines in Europe to a halt. On Thursday, French President Emmanuel Macron urged other leaders to activate the instrument, known in Brussels as the “trade bazooka”, which could allow the EU to slap tariffs, quotas, export controls or market bans on Chinese firms in retaliation. “The decisions announced by the Chinese government on October 9 pose a significant risk. In essence, these actions would severely hamper other countries from developing a rare earths industry,” von der Leyen said, referring to Beijing’s move to control the export of processing equipment for the minerals. She used some of her most assertive language to date when describing the impact of China’s accession to the World Trade Organization in 2001. “When China joined the WTO … most of us hoped a new dawn of low tariffs and shared security and prosperity would emerge. And in a number of ways, this did deliver for a time – even if the benefits from it were not shared or spread evenly,” von der Leyen said. “But the cooperative world order we all expected or at least hoped for 25 years ago is being replaced by a confrontational global economy. Stealing technologies, hostile investments, export controls, subsidies, all of this is no longer the exception – these are tools for imposition and competition.” The rare earths issue was discussed during a call between EU trade chief Maros Sefcovic and Chinese Commerce Minister Wang Wentao on Tuesday and will be on the agenda when a Chinese delegation visits Brussels next week. Von der Leyen’s speech focused on geoeconomics and did not pull punches to the scale of the challenge facing Europe. “We may be approaching a shift in the international order – one increasingly defined by power, whether economic, technological, or military. A world of imperial ambitions and hostile actors. A world of transactionalism and zero-sum games,” she said in a veiled reference to the United States and China.
