EU seeks enhanced safeguards against American economic penalties
The European Commission is set to present an action plan on Tuesday, aiming to shield European companies from the extraterritorial effects of sanctions imposed by third countries, such as the United States. This move comes a day before the inauguration of US President Joe Biden.
The action plan, which includes proposals aimed at strengthening the global role of the Euro, is a response to the negative impact of Iran sanctions imposed by outgoing US President Donald Trump on European companies. The Commission also aims to address the vulnerability of European businesses to sanctions imposed by other countries.
One of the key measures in the action plan is the expansion of the Blocking Statute, an EU law designed to protect European companies from the effects of sanctions that the EU has not joined. The Commission promises to review the expansion of the Blocking Statute as part of the action plan.
Another proposed measure is the implementation of protective restrictions against investor-to-state dispute settlement (ISDS) claims related to EU sanctions. This move aims to enable member states to recover damages from sanctions-related arbitration brought by listed persons or entities, thereby shielding EU companies and governments from economic harm caused by third-country sanction disputes.
The action plan also includes a directive (EU) 2024/1226, which strengthens sanctions enforcement by urging member states to uniformly transpose and implement sanctions rules. This directive provides clearer legal predictability for EU operators and aims to close enforcement gaps and inconsistencies across member states.
Moreover, the action plan proposes sanctions packages targeting foreign entities supplying goods or supporting military efforts against EU or allied interests, including companies in third countries such as China and Belarus. These measures extend EU restrictions globally to prevent circumvention by non-EU actors.
Regarding the impact on the euro’s global role, these measures reinforce the euro's position in global trade and finance by ensuring that EU companies comply with EU sanctions rather than conflicting third-country laws, reducing legal risks and regulatory fragmentation in international transactions. The enhanced EU’s ability to enforce sanctions robustly supports EU foreign policy and economic security objectives where the euro is often the settlement currency.
Furthermore, these measures limit the scope for non-EU jurisdictions to undermine EU sanctions through alternative economic or financial channels, thereby consolidating the euro area's jurisdictional reach in cross-border economic activities.
In summary, the Commission’s action plan combines legal, regulatory, and enforcement tools to protect EU companies from extraterritorial effects of third-country sanctions while promoting the euro as a secure and predictable currency for international commerce under the EU’s sanctions framework. These efforts contribute to strengthening the euro’s geopolitical and economic influence globally.
The European Commission's action plan, in response to the impact of US sanctions on European companies, includes a review of the expansion of the Blocking Statute, a measure aimed at protecting European companies from extraterritorial effects of sanctions imposed by third countries, such as the US. The plan also proposes implementing protective restrictions against investor-to-state dispute settlement (ISDS) claims related to EU sanctions, a move aimed at shielding EU companies and governments from economic harm caused by third-country sanction disputes.
