For one, the strategy currently outlines the European Commission’s proposal to identify and assess “risks to the EU’s economic security that threaten its key interests,” such as risks related to “technology security and technology leakage.” But now, China and other nations could simply use litigation to force the disclosure of these sensitive technologies.
The strategy also argues that the EU has an interest in preventing European financial resources or intellectual property from being used to create military or intelligence technologies that may be used against it. But then why would Europe let the fox into the henhouse, exposing itself to China-funded litigation under the PLD, which would disclose details about high-end technologies?
Finally, the EU is actively working to improve the effectiveness and efficiency of its current export control framework, which is largely in the hands of its member countries. But yet again, this laudable measure to sustain Europe’s long-term technological edge could be undone by the new directive’s self-inflicted loopholes.
As the West “de-risks” from an increasingly provocative China, Europe shouldn’t be “re-risking” its exposure through the new PLD. The bloc can accomplish the policy objectives underlying it — balancing consumer protections and business growth in Europe — without inviting China or other adversaries into the courtroom. And as the new directive is likely to enter into force and be transposed into national law over the next couple years, the European Commission and EU members need to ensure adequate protection for the ingenuity and inventiveness that sets leading businesses apart.
As the bloc faces global economic headwinds, it’s in everyone’s interest to avoid unforced errors like those embedded in this legislation and ensure litigation doesn’t compromise the competitiveness of critical sectors.
And most importantly, as this new directive is implemented, the EU should develop further guidance, so that the text is applied reasonably, to safeguard security.
* Covington represents companies that are likely to be impacted by the Product Liability Directive.