It's not really true that everyone committing a crime will use cryptography. Most people (including criminals) do not care or think about cryptography that much, but the providers of the services and devices they use to commit crimes do think about it. In that way, lawful service providers help haphazard criminals cover their tracks. I believe the idea is to change that, so that lawful service providers will not provide that level of security anymore.

All that being said, obviously countries outside of the EU will continue to allow cryptography. So, unless they create a "great firewall" sensible people (including sensible criminals) will just move elswhere, possibly weakening the EU's presence in the Internet as a whole (which seems like a bad move to me).