Extraterritorial sanctions on trade and investments and European responses
Extraterritorial sanctions have become a critical challenge for Europe, due to the Trump administration’s renewed aggressive policy against Iran and Cuba. These US sanctions with extraterritorial effect potentially menace to punish EU companies and financial institutions to engage in a wide range of economic and commercial activities with Iran and Cuba (and other countries). Companies that disregard the US extraterritorial sanctions face major fines and/or criminal charges in the US, or even exclusion from US markets which would be otherwise open to foreign businesses.
The issue of extraterritorial sanctions is not limited to the US, but Europe’s exposure to US extraterritorial sanctions such as those related to the withdrawal from the Joint Comprehensive Plan of Action (JCPOA) or the Helms Burton Sanctions Act, have harmed European countries’ interests in particular and have demonstrated the limited European success to implement an independent strategy.
The question arises, what Europe could do to become more effective and hedge against extraterritorial sanctions that are not compatible with European (geopolitical) interests. This includes considerations, for instance, to diversify its international relationships and enhance its own economic dynamism to avoid excessive dependence on any one power, as well as to reinforce Member States’ collective ability to take countermeasures against economic pressures from abroad and to establish compensation mechanisms for European entities hit by sanctions.
In the study, experts present the main findings of their research, which addresses the following aspects:
- Overview on existing extraterritorial sanctions and implementing measures and their impacts especially on the EU and its Member States;
- Economic assessment of the possible effects of extraterritorial measures on EU industries and EU imports and exports;
- Legal assessment of the compatibility of measures deriving from extraterritorial sanctions under international, in particular WTO, law and EU law;
- Political assessment of existing EU counteractions and possible ways to improve their usage and effectiveness including attitudes of main trade partners of the EU other than the US.
Project funding: European Parliament
Leader of the consortium: University of Innsbruck
Partners: CASE, CEPS, Göttingen University