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Chinese representatives have raised concerns at the World Trade Organization regarding the European Union’s proposed amendments to its Cybersecurity Act and the new Industrial Accelerator Act. They warned that these legislation changes could potentially breach WTO rules.
The proposed revision of the Cybersecurity Act permits the EU to classify certain nations as cybersecurity threats based on “arbitrary” and non-technical standards. This classification could lead to the exclusion of companies deemed “high-risk suppliers” from the EU market across 18 sectors related to information technology. Officials highlighted at a WTO meeting held from May 20 to 22 that such measures might infringe upon WTO’s most-favored-nation and national treatment principles, pointing out that the justification based on national security lacks sufficient grounds.
If enacted, these measures could cause significant economic repercussions, with estimates suggesting losses of around EUR 367.8 billion (approximately USD 427.2 billion) over five years. This economic impact could severely affect industries such as energy, telecommunications, logistics, and manufacturing, according to a joint report by China’s Chamber of Commerce to the EU and KPMG.
Regarding the Industrial Accelerator Act, officials explained that it ties public subsidies and support programs to EU rules of origin. It mandates that products—like electric vehicles and their components—be assembled within the EU and incorporate a high percentage of EU-sourced raw materials. Concerns were expressed that these requirements might resemble import substitution subsidies, which are prohibited under WTO rules, specifically under the Agreement on Subsidies and Countervailing Measures. The restrictions could also violate commitments under the General Agreement on Tariffs and Trade (GATT) 1994 and the Agreement on Trade-Related Investment Measures if foreign companies are compelled to use domestic raw materials to qualify for subsidies or access the market.
Additionally, officials pointed out that investment screening provisions, which link procurement from EU suppliers to approval processes, could discriminate against foreign investors.
The EU clarified that the Industrial Accelerator Act is still in legislative draft form and is subject to further amendments.
China’s Ministry of Commerce formally submitted comments on the two legislative proposals to the European Commission on April 17 and 24. The ministry recommended that the EU omit provisions related to “countries posing cybersecurity concerns” and “non-technical risks,” as well as revise or remove criteria that designate “high-risk suppliers” and associated restrictive measures.
The ministry warned that if the EU proceeds with these laws and adopts discriminatory practices against Chinese companies, China would be compelled to implement countermeasures.
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