In recent times, geopolitical tensions have made the need for the EU to fill a regulatory gap increasingly relevant. In fact, to this day, there is no regulatory tool that shields the EU from coercive practices by third countries.
Coercive practices occur when an EU trading partner seeks to shape future EU legislative initiatives or dissuade the EU from introducing certain measures altogether. For example, this can happen through the imposition (or threat of imposition) of additional and discriminatory import tariffs, security controls on goods coming from a specific EU country, or boycotts of goods or investors from that particular country.
The need for a tool to protect against coercive practices dates back to 2021 when the European Parliament and the Council decided to start a process to address this regulatory gap.
Just a month ago, news broke of a political agreement on the new anti-coercion instrument ("ACI"), which aims to defend EU interests on the global stage.
The ACI is primarily designed to act as a deterrent against any potential economic coercion. If economic coercion nevertheless occurs, the ACI provides a framework to convince the third country to cease coercive measures through dialogue and engagement. However, if engagement fails, it also grants the EU access to a wide range of possible countermeasures (e.g., imposing tariffs, restricting trade in services, and limiting access to foreign investments).
The emerging framework will also allow the EU to request the third country to remedy the harm caused by its economic coercion.
The role of the Council will be crucial in determining whether the EU or a Member State is the target of economic coercion, as well as in defining the timelines for EU action in using the anti-coercion instrument.
The next steps will lead the European Parliament and the Council to complete the approval procedures for the new regulation before it can enter into force, which is expected in the autumn of this year.
