According to diplomats familiar with the proposal, the new measure could be used in the form of trade or investment restrictions on China over the pressure it is exerting on Lithuania after it allowed Taiwan to open a de facto embassy there. China has downgraded diplomatic relations with Lithuania and officials in Vilnius say Beijing has also imposed restrictions on its exports and pressured companies in third countries not to do business with the small Baltic state. Greens MEP Reinhard Buetikofer said that if evidence was needed to prove that the EU needs an effective instrument to protect itself against economic coercion by third countries, China's blackmailing pressure on Lithuania has now provided it. According to Mr Buetikofer, who is subject to Chinese sanctions, the Commission proposal must not allow just one EU country to block action, pointing out Hungary's closer ties with Beijing and previous use of a veto. The proposal, which will need to be approved by the European Parliament and the group of EU countries called the Council, has already sparked concerns among some member states. An EU diplomat said we can expect intensive discussions. France, which will hold the rotating EU presidency in the first half of 2022, supports the measure, but more free market-oriented states, such as Sweden and the Czech Republic, regard it as potentially protectionist and liable to draw the EU into trade wars. READ MORE: Sajid Javid suddenly CANCELS all planned appearances as No 10 panic
Sweden and the Czech Republic expressed their fears in a paper warning the Commission that any EU tool needs to be able to avoid doubts about its full compliance with international law. They said that there were large foreign policy impacts and asked for capitals to be fully involved in decision-making. Economic coercion should be defined very clearly, and measures should only be taken if it is in the interests of the EU, and if it is in the EU's interest to act. Some EU member states say they will need to have a say in the deployment of such measures, rather than leave decisions to the EU executive.