219758019_EU-China_Weekly120521
picture alliance/dpa/BELGA | Kurt Desplenter
MERICS Briefs
EU-China Weekly Review
7 min read

Dual-use + Hungary and Hong Kong + Taiwan in international organizations

Dual-Use Regulation approved with likely implications for exports to China

On May 10, the Council of the European Union endorsed an overhaul of the “Dual-Use Regulation” which regulates exports of selected technologies that could be used by authoritarian countries such as China, in human rights abuses. The regulation, approved by the European Parliament in March, is now ready for official publication and implementation after 90 days. 

What you need to know 

  • The rules will apply to technologies such as interception software, biometric surveillance (e.g., facial recognition), microchips or sensors and will task member states with licensing and potentially banning sales. In the process the member states will need to consider potential “use in internal repression or the commission of serious violations of international human rights,” a standard that has so far been applied to military tech. Several human rights organizations recommend toughening the measures. They point out that already existing controls of military goods exports are not always effectively implemented.
  • The implementation of the rules will be brought to the EU-level, as the European Commission will be obliged to publish annual reports on surveillance technology exports licenses. Civil society organizations will be able to see which licenses have been granted by member states and where their products are being exported. Member states will have the right to propose licensing for new categories of cyber-surveillance tech, but this will in practice require unanimous support of EU27.  

Quick take 

While the exact legal definition of risk to human rights is unclear, the new regulations are likely to affect exports to China, as the EU has made political decisions targeting China’s misconduct on human rights. The EU sanctions from March 2021 recognized the human rights violations in Xinjiang and the package of measures following National Security Law in Hong Kong in July 2020 included ban on export of surveillance tech. Reportedly, French, Swedish and Dutch companies have exported digital surveillance tools to Chinese state security agencies and entities in Xinjiang; with the new regulations in place such business deals could be banned. Not covered by the regulations, however, is another challenge that the EU needs to address - the potential transfer of surveillance technology through R&D cooperation between Chinese and European entities. 

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Once again Hungary blocks the EU’s response measures on Hong Kong

The EU27 failed to agree on a package of response measures over the Hong Kong electoral regulations changes ahead of the Foreign Affairs Council (FAC) on May 10. Hungary repeatedly opposed the introduction of the package, which requires unanimous support.

What you need to know 

  • After an unsuccessful attempt in April, the Council reportedly tried to secure a consensus for the package by softening the language of the measures. For instance, the draft vowed only to pay “increased attention to the situation in Hong Kong” and to “respond appropriately” should the National Security Law be applied extraterritorially against EU citizens or entities. Moreover, the plans to suspend remaining extradition treaties with China, present in the April draft were substituted by a condition that would make a suspension of the treaty subject to discussion only “when appropriate.” Nonetheless, Hungary opposed the package; its Ministry of Foreign Affairs stated that the EU’s position is already clear, and any further declarations will only result in unnecessary deterioration of relations with China.
  • Following FAC, German Minister Heiko Maas publicly criticized Hungary’s move as “absolutely incomprehensible” and called out Viktor Orbán administration’s track record of undermining the united European stance on China. High Representative Josep Borrell signaled that “technical-level groups” will use one more week to find a solution that can be acceptable for all EU27. He indicated that if such efforts turn out to be fruitless, then “we have to take positions that don’t reflect unanimity.”  

Quick take 

The German government has the capability to pressure Orbán’s administration, as shown by Hungary’s decision not to block March sanctions. Over 20 percent of Hungarian exports come from the automotive sector and the factories of German carmakers. In 2019 Germany was responsible for more than a quarter of Hungarian exports and imports giving it much greater economic leverage than that of China, which comparatively to Germany plays a very small role in Hungarian economy. The talks next week will test the extent of Budapest’s resolve and of Berlin’s willingness to act. 

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Taiwan’s participation in international organizations gains European support 

On May 5, the G7 released a joint statement that expressed support for Taiwan to join the World Health Organization (WHO) forums. The endorsement is based on Taiwan’s exceptional success in containing the pandemic. This signal is further affirmation of the EU’s growing willingness to increase support for Taiwan’s standing on the international stage.

What you need to know

  • On May 6, the French Senate unanimously voted to support Taiwan’s participation in several international organizations such as the WHO, Interpol and the International Civil Aviation Organization. These institutions allow participation of entities without state status and the resolution explicitly stated that this move would not change France’s “constant position” with regards to relations with Mainland China. Still, the Chinese Embassy in Paris criticized the resolution calling on France to “respect the national sovereignty and territorial integrity of China”.
  • On May 10, Taiwanese President Tsai Ing-Wen addressed the fourth Copenhagen Democracy Summit organized by the Alliance of Democracies, a Danish NGO targeted by China’s countersanctions. Tsai called for the support of Taiwan’s access to the WHO’s Assembly and to restart talks on the EU-Taiwan bilateral investment agreement (BIA). Danish Foreign Minister Jeppe Kofod and Hong Kong dissident Nathan Law also attended the event. The event was criticized by the Chinese Embassy in Denmark.  

Quick take 

Over the last two years an increasing number of EU lawmakers and member states have been voicing support for engagement with Taiwan. In September 2020 the EU organized the first European Investment Forum in Taipei. The economic reasons for the BIA may be limited given the existing openness of Taiwan’s market and limited Taiwanese investments in Europe. Yet, as tensions with Beijing grow, the EU has increased incentive to support the fellow democracy, exchange notes on countering disinformation and economic coercion and cooperate on resilience of supply chains - particularly in the semiconductors sector. 

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