EU Sanctions Proposal: Why is the European Union considering trade restrictions on Indian, Chinese firms?

The European Union (EU) has proposed sanctions on around two dozen companies, including one from India and three from China, for allegedly supporting Russia’s war in Ukraine, Bloomberg reported.

As part of the sanctions, trade restrictions are proposed to be imposed on the listed companies. Besides this, the EU has recommended sanctions on over 110 individuals and entities, forming part of a broader package commemorating two years since Russia’s invasion of Ukraine.

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Why Are the Companies On the Sanctions List?

The listed companies are primarily engaged in technology and electronics, as per the report. They have been accused of contributing to Russia’s military and technological capabilities and the draft document highlights their purported role in advancing Russia’s defence and security sector.

The draft document, as seen by Bloomberg, accuses these companies of importing prohibited technologies and electronics and subsequently reexporting them to Russia.

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Where Are These Companies Situated?

The proposed list includes three Chinese firms, and one each from India, Sri Lanka, Serbia, Kazakhstan, Thailand, Turkey, and Hong Kong, among others. The document clarifies that inclusion doesn’t attribute responsibility for actions to the respective jurisdictions. Over 620 companies, mainly from Russia, have been previously listed by the EU.

If approved, this move would mark the EU’s first instance of imposing sanctions on mainland Chinese companies since Russia’s invasion of Ukraine

The proposed restrictions aim to prevent European firms from engaging in trade with the listed companies, aligning with the EU’s strategy to curb Russia’s access to sanctioned goods through third-country entities. 

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Barrier Towards Action Against Chinese Firms

The issue is of significant importance for the EU, especially in its relationship with China, a key trade partner. Notably, earlier attempts to list Chinese firms faced resistance from certain member states and assurances from Beijing. Germany, for example, is reliant on China as the largest market for carmakers such as Volkswagen AG, and closely monitors developments.

Further, EU sanctions require unanimous approval from all member states and may undergo changes before adoption. The EU Commission spokesperson declined to comment on the proposal, and no immediate response was received from China’s embassy in Brussels, according to the report.

(With inputs from Bloomberg)

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Published: 13 Feb 2024, 08:23 AM IST

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