A New Threat to the EU: Lawfare

A Tool for Control

Lawfare is considered a relatively new threat. Certain states use it to legitimize their actions and to set up new interpretations of fact. Countries considered allies tend to use lawfare frequently to force states or companies to adopt behaviors that are beneficial for them. For example, the United States often relies on the extraterritoriality of its law. The US administration destabilizes countries and foreign companies through various legislation and lobbying efforts in international organizations, to improve its influence and reinforce its global hegemony. Extraterritoriality allows the US to intervene in the internal affairs of other states. Strategic companies, essential for state sovereignty, are typically the primary targets. The US and other countries, such as China, stand out by creating tools that allow them to control or restrain the economies of independent nations. European companies are also victims of these aggressive policies, which showcases the EU’s reluctance to stymie US or Chinese influence.

China and the US have established a law on exportation, crippling the activities of some European companies. One of the most famous examples of this is the International Traffic in Arms Regulations (ITAR) created in 1976 whose effects are already evident. The goal of ITAR is to control the exportation of technologies and services made with American components. In that sense, the US can block or considerably delay the exportation of products. In 2018, the US took over the sale of 12 French Rafale aircraft because they were exported with SCALP missiles containing American components even though they were produced by the European company MBDA. China also has an analogous tool for controlling its exports that represents a threat to EU markets. China’s lead role in several key industries, such as the production of semiconductors, must be addressed by the EU. The US and China have developed broad lawfare tactics with an expansive list of companies that serve their interests. Even if these companies are not excluded from trade, their reputation remains deeply damaged. The examples of extraterritoriality are numerous. The Cloud Act, adopted in 2018, provides access to foreign data stored in the US. These examples shed light on European naïveté towards the US and the presence of loopholes in EU law.

A Wake-Up Call for the EU?

EU member states face many challenges that must be addressed at the European level. Some countries do not have the ability or the resources to mount an effective response. The goal is to improve knowledge on lawfare through exchanges, development of analytics tools, and monitoring information types such as open source, human source, etc. The challenges posed by the use of the law as a coercive instrument will not be resolved by a new directive or statement. The EU must establish cooperation between member states, provided that states be made aware that any future lawfare regulation could lead to direct confrontation with the US. As the biggest exporter in the EU, Germany has already started to combat lawfare by taking control of critical high-end technologies. The Kriegswaffenkontrollgesetz (KrWaffKontrG) translated as the “Weapons of War Control Act” could serve as a model for the EU in its struggle against US lawfare. It is similar to the ITAR, as it provides the German government control of weapon exports containing German components.

Until recently, the EU has been too sluggish to act. The polemic launched in July 2023 by the nomination of American-born Fiona Scott Morton as chief economist of the Directorate-General for Competition highlighted the inconsistency of the EU. She would have been at the head of the EU’s anti-trust legislature. The very idea of appointing an American to such an important position seems rather irrational.

The General Data Protection Regulation (GDPR) implemented in 2018 governs data processing practices in the EU whatever the structure type, activity, or importance. An interesting point is that the GDPR concerns EU organisations as well as organisations outside the Union that handle the data of its citizens. Also, the Digital Markets Act (DMA), applicable since May 2023, supports the establishment of fair competition in the European Internet market, which is currently dominated by GAFAM (Google, Amazon, Facebook, Apple, and Microsoft). They have access to millions of terabytes of data through opaque systems which they use to stifle their competitors and prevent the rise of European actors. The DMA concerns corporations based both inside and outside the EU. For the moment, the EU’s lawfare is underdeveloped and suffers from divergent member policies. Nevertheless, through common projects, the EU will try to free itself from foreign interference. The Future Combat Air System (FCAS) and the Main Ground Combat System (MGCS) have been launched with the ambition to be ITAR-free. Lawfare represents an opportunity for the EU to kickstart a new industrial policy.

The concept of lawfare is still volatile. Its interpretation differs from state to state, but it is evident that lawfare has become an immaterial weapon in global trade. As a major economy, the EU must ensure self-reliance through legislation. This is, of course, easier said than done.