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Policy Paper -September 2024
Deploying Europe’s
Economic Security Policy
in the Indo-Pacific Region
This policy paper has been published within the framework of the
Observatory of Multilateralism in the Indo-Pacific, a research and
events program initiated by the Directorate General for International
Relations and Strategy (DGRIS) / French Ministry for Armed Forces.
Institut Montaigne contributes to this major program alongside two
other French think tanks, the Foundation for Strategic Research (FRS)
and the European Council on Foreign Relations (ECFR), as well as two
French academic institutions, Sciences Po and Inalco.
Economic security policy and strategy toward the Indo-Pacific region are both current areas of focus among policymakers in France and across the Europe Union.1
However, there is little convergence between these two
policy areas – even though the Indo-Pacific region potentially offers interesting opportunities to deploy aspects of European economic security policy, there has been little effort to apply European economic security policy to the region so far. This is despite the fact that the Indo-Pacific region is increasingly emerging as a coherent regional economic space
to which economic security considerations are not only relevant, but also central, as demonstrated by the rise of the Indo-Pacific Economic
Framework for Prosperity (“IPEF”) and the Quadrilateral grouping of Australia, India, Japan, and the United States (the “Quad”). These cooperative frameworks share, among other features, a lack of declared interest in recruiting new members from the EU Member States. The focus on economic security in these formats differentiates conversations about “the Indo-Pacific” from earlier discussions of “the Asia-Pacific,” which tended to be focused on free trade, market access and the forces of globalization.
This policy paper aims to highlight how France and the EU can advance their economic security interests in the Indo-Pacific region. In particular, it stress the importance of a clear and proactive vision for the creation of partnerships aimed at economic and commercial diversification with certain Indo-Pacific countries. Strategic diversification appears to be one of the most promising ways of reducing risks to our economic security, especially for anticipating supply chain disruptions in Europe during times of crisis and reducing their impact. However, although a shift in this direction has begun and is gradually becoming evident in decisions made by certain EU companies, this trend is not yet clear or irreversible. The paper offers recommendations for strengthening Europe’s economic security policy in four key areas: controlling technology transfers, responding to economic coercion, securing critical infrastructure and strengthening supply chain resilience. In sum, conceiving of theIndo-Pacific as a space for the effective application of European economic security policy can help reinforce the European footprint in this region.
Table of contents
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1 Controlling Technology Transfers:
Disseminating best practices . . . . . . . . . . . . . 11
2 Critical Infrastructure Security: Building
a More Attractive European Offer . . . . . . . . . . . . 16
3 Combating Economic Coercion: Coalition
Thinking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4 Supply Chain Resilience: Assuming
a Vision of Strategic Diversification . . . . . . . . . .. . 31
5 Structuring the Indo-Pacific through
Economic Security Policies: Jumping
on the Bandwagon . . . . . . . . . . . . . . . . . . . . . . . .. . 44
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 49
Introduction
Economic security is a relatively new topic in public policy discussions in
Europe, the United States, and East Asia. There is still no widely accepted definition of economic security – its scope varies from one country to another and changes over time, and debates about the issue continue to evolve rapidly.2
Over time, the concept has expanded to cover a broader range of issues. Whereas early discussions of economic security focused on protecting a country’s strategic assets – particularly by controllingtechnology transfers – the concept is now understood to encompass a broader set of issues including supply chain risks, economic coercion, and industrial policy.
In Europe, the debate about economic security tends to focus on how to strike the right balance between defensive measures to protect technology, on the one hand, and more offensive measures to promoteour industrial and strategic assets, on the other. Should economic security be narrowly defined in terms of military security, or should our
understanding of it be expanded to include competitiveness? The question of where to draw the line between offensive and defensive strategies remains open, as public policy is gradually being developed to address both defensive and offensive approaches. Even though the fundamental debate between these two approaches has not yet been settled, progress can still be made in developing European economic security policy.
The European economic security agenda is being developed in response to an international environment characterized by marked asymmetries in our economic, technological, and commercial exchanges with China; a Chinese policy of using major infrastructure projects to gain influence;serious supply risks to certain products (e.g., masks, semiconductors,and critical materials); Russia’s invasion of Ukraine; the risk of escalating geopolitical tensions in the Middle East and Asia; and the competition for technological superiority, driven above all by American and Chinese ambitions but with a significant impact on third parties.
Against this backdrop, the incorporation of economic security considerations into European foreign policy and the construction of an economic foreign policy is both unavoidable and necessary. The European Commission’s June 2023 strategy on economic security was published in response to the deteriorating international environment and identified four key areas of concern: supply chain resilience; physical and cyber security of critical infrastructure; technology transfers, particularly of dual-use technologies; and the instrumentalization of economic dependencies, or economic coercion. Measures to address each of these four key areas could potentially be deployed by Europe in cooperation with partner countries in the Indo-Pacific region.
However, two questions remain unanswered: Is the Indo-Pacific a relevant framework for action in each of these critical areas? Which diplomatic formats are most likely to serve Europe’s economic security interests?
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