Extraterritorial sanctions on trade and investments and European responses

Study 20-11-2020

Recent US measures directed against Iran, Cuba and Russia (North Stream 2) have become indirectly a critical challenge for the European Union as well. As they purport to deter economic actors under EU jurisdiction from engaging with target countries, they have an important extraterritorial dimension, which affects EU business and individuals and ultimately the sovereignty of the EU and its Member States. A review of the existing sanction regimes and of the geopolitical context reveals that other international players and the PR China in particular may follow suit in using such measures. The study shows that extraterritorial sanctions have important economic implications, particularly for the EU and its vulnerabilities. Extraterritorial sanctions also raise critical questions as to their legality under general international law, WTO law and other specific international rules. The EU is especially affected by these measures and has taken some measures already in response. These could be improved and additional measures could be taken, as the policy recommendations set out.