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

Dutch semiconductor equipment giant among several business groups on continent critical of Brussels’ efforts to de-risk its relations with Beijing
American policy “all about curtailing the ability of China to make industrial progress”, ASML’s top EU lobbyist adds

China-EU relations

Finbarr Berminghamin Brussels

Published: 1:45am, 12 Jan 2024

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The European Union is not in the “Champions League of economic security”, and even “struggles to perform at Europa League level”.

That was the withering assessment of a senior representative of ASML, Europe’s most valuable technology company, who used a football analogy to attack Brussels’ efforts to de-risk its relations with China.

“If you think about the Champions League of economic security and geoeconomic statecraft, we have to think of the United States, we have to think of China, and we also have to think of Japan,” said Wouter Baljon, the Dutch company’s top EU lobbyist, referring to Europe’s premier football tournament.

“If you think of the Europa League, or tier two, we look at countries particularly in our industry, like [South] Korea, like Taiwan, and at best Europe, the EU as a collective.

“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, valued at US$285 billion, is the world leader in the chipmaking equipment essential for manufacturing advanced semiconductors and considered the crown jewel in Europe’s tech sector.

Its executives should have a good idea of who’s who in the pantheon of geopolitical arm-twisting, having been caught in the cross hairs of a fierce US-China tech war.

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

ASML blocked from shipping chip-making equipment to China ahead of deadline

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.

Thierry Breton, the European commissioner for the EU’s internal market, has described Europe as a ‘third bloc’ in a multipolar world. Photo: EPA-EFE

“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.”

China’s imports of Dutch chip-making equipment surged tenfold in November

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”.

EU firms are reluctant to speak up on China as Brussels tries to de-risk

“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.

The war in Ukraine had “created a new consensus in the business community” on the security issues Europe faces, she said.

“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.”