European Union not in ‘Champions League’ of economic security, ASML rep says

“The EU clearly … aspires to be in the Champions League, but for high technology, they struggled to perform at Europa League-level,” said Baljon at an event in Brussels on Wednesday, referring to the continent’s inferior competition.

ASML has been forced to stop selling some advanced precision lithography machines to Chinese buyers at the behest of the Biden administration.

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The American policy was “all about curtailing the ability of China to make industrial progress”, Baljon said, adding that the EU was living in “la-la land” if it thought otherwise.

“We haven’t acknowledged that export controls have become an industrial policy instrument. We still live in this la-la land that it’s about dual-use goods, it’s military-civil fusion.”

Baljon delivered his comments in Brussels during an event hosted by the European Policy Centre on the EU’s capacity to act as an economic security power as it looks to reduce its dependencies on Beijing.

Earlier in the day, EU industry chief Thierry Breton described Europe as a “third bloc” in a multipolar world.

“We need to continue to promote Europe as a third bloc, a balancing force between the US and China,” the commissioner said at the event. “Of course, we will remain an open continent, but on our terms, more assertive than ever.”

However, ASML’s representative was less confident, saying the European Commission would struggle to define an economic security strategy without the buy-in of powerful member states, which have pushed back against the policy.

“A certain humbleness might certainly help the EU to act as a collective, particularly in high technology,” said Baljon. “We are not an incumbent unfortunately. As the EU 27, we are a challenger, and we need the instruments and the approaches to reflect this.”

“We might speak of the ‘geopolitical commission’, but at this point, I think it’s only as geopolitical as [the] Franco-German axis allows it to be, and you also don’t have the manpower to really be in this Champions League.”

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The EU will present an “initiative” on screening outbound investments and a proposal on export controls for four crucial technologies, including microchips, on January 24. These form part of a package of tools aimed at de-risking its trading ties with China.

Baljon’s remarks were among a series of broadsides voiced at the event as businesses lined up to criticise the EU’s plans.

Malte Lohan, director general of Orgalim, a trade association representing Europe’s tech industries, said firms in his sector were facing “a tsunami of regulation”.

“You can’t just regulate your way to economic security from a few office blocks in Brussels,” Lohan said, adding he was “very nervous” about an “unprecedented shift to public intervention in our supply chains”.

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“If you look at any one of the instruments in isolation, of course there’s always a very good reason for it … I think we need to accept that this is a completely new paradigm in terms of how supply chains are regulated through public-sector intervention.”

Luisa Santos, deputy director general at BusinessEurope, another lobby group, said the EU endangered its competitiveness by putting security concerns ahead of economic growth.

“But we should not overdo it also, because we have other problems that we need to deal with and we have not dealt with yet, including our competitiveness … what we have seen in these last years is that compared to other partners in terms of overall competitiveness … we [in Europe] are not in such good shape.”