Questions & Answers regarding the Anti-Coercion Instrument

What is the Anti-Coercion Instrument (ACI)?

The ACI is a response to the rising problem of economic coercion, and aims to protect the interests and sovereign choices of the Union and its Member States. It provides a means to act in situations where a non-EU country unduly interferes in the policy choices of the Union or its Member States by applying or threatening to apply measures affecting trade or investment.

The primary objective of the ACI is deterrence. The instrument will, therefore, be most successful if there is no need to use it.

Nevertheless, if a third country resorts to coercion, the ACI provides a way to respond to coercion. The instrument allows the Union to formally identify instances of economic coercion and to respond, where possible through dialogue and engagement, but also – as necessary – through response measures.

The ACI provides a framework for the Union to pursue reparations for the injury caused by the economic coercion.

At the same time, the instrument strengthens international coordination of efforts to deal with economic coercion by plugging into international frameworks to respond to coercion.

What exactly does 'economic coercion' mean?

‘Economic coercion' under the Regulation refers to a situation where a third country is seeking to pressure the Union or a Member State into making a particular choice by applying – or threatening to apply – measures affecting trade or investment.

Such practices unduly interfere with the legitimate sovereign choices of the Union and its Member States. Whether a third-country measure fulfils those conditions would be determined on a case-by-case basis.

Economic coercion may affect any policy field and may take the form of legislation or other formal or informal action or inaction.

Can you give an example of economic coercion?

There are many types of coercive practice. For example, an EU trading partner may try to shape future legislative initiatives of the EU or dissuade the EU from putting in place a measure altogether by, for example, introducing (or threatening to introduce) extra, discriminatory import duties, intentional delays or refusing (or threatening to refuse) authorisation needed to do business. They might also impose discriminatory selective border or safety checks on goods from a given EU Member State or organise state-sponsored boycotts against goods or investors from that country.

What led to the legislative proposal in the first place?

The recent rise of geopolitical tensions, weakened international cooperation and an increase in the weaponisation of trade and investment have all triggered economic coercion. Coming from a variety of countries, such coercion threatens to undermine the ability of the EU and its Member States to take legitimate action in areas of their own sovereignty. In 2021, the European Parliament and several Member States raised their concerns about economic coercion and asked the Commission to develop a mechanism to deter and counter it (see Joint Declaration).

Doesn't the EU already have instruments to address economic coercion?

The EU does not currently have an instrument that specifically addresses economic coercion or permits the imposition of commercial policy measures in response to economic coercion.

To safeguard its rights and interests and those of its Member States, the EU needs an appropriate instrument for deterring and counteracting economic coercion. Standard diplomatic means may not always be sufficiently effective against economic coercion and, moreover, may not have a deterrent effect. A dedicated instrument also signals to international partners that the EU will not tolerate economic coercion, highlighting the EU's resilience and contributing to the EU's open strategic autonomy.

Why is the ACI the right way to deal with economic coercion?

The EU needs to be able to respond to cases of economic coercion in a structured and uniform manner. A dedicated legislative framework ensures predictability and transparency; it underlines the EU's adherence to a rules-based approach. Predictability and transparency play a role for the deterrence function of the instrument. Procedurally, a legislative framework under the common commercial policy offers opportunities for swift and efficient action where necessary. A legislative framework also provides a platform for international cooperation on the issue of economic coercion.

Does the ACI target a particular country?

No, the ACI does not target any particular country. It addresses the problem of economic coercion wherever it may come from. It can be applied to any country using economic coercion against the EU or its Member States.

Is the ACI compatible with international law?

The EU policy intervention – in the form of the regulation itself and possible action under it – will be compatible with both the EU's legal order and international law. Countermeasures would be deployed when necessary, and could consist of non-performance of international obligations in a permitted way in response to a breach of international law by the coercing country.

This instrument can only be engaged when a third country deploys economic coercion and so creates the situation.

Does the ACI serve to enforce obligations under the WTO Agreement? 

No. The instrument concerns specific behaviour, i.e. economic coercion, which is not addressed by the WTO Agreement. Therefore, the instrument does not respond to a breach of WTO (or FTA) law, but rather to a breach of international law.

In no event will the ACI be a means to short-circuit the WTO dispute settlement system. It will not be a means to impose countermeasures to respond to a breach of WTO rules. There are multilateral rules requiring all WTO Members to settle WTO disputes through the WTO dispute settlement system.

Which Union response measures are available under the instrument?

The range of potential measures is designed to be broad, in order to allow the selection and design of an effective and efficient response to an individual case of economic coercion with minimal or no impact on the EU economy. The aim of these measures is always to induce the cessation of the coercion.

The ACI permits import and export restrictions to be placed on goods and services, but also on intellectual property rights and foreign direct investment. Additionally, the ACI enables the imposition of various restrictions on access to the EU market, notably to public procurement, as well as the placement on the market of products under chemical and sanitary rules.

The Commission's Communication to the European Parliament and the Council on the Commission’s proposal for an Anti-Coercion Instrument of December 2021 recalls further possibilities within the Commission's existing powers, particularly concerning funding, where restrictions can also be imposed, if necessary.

Crucially, the EU's response measures are available only as a last resort and subject to a number of conditions – but they can be deployed swiftly, if the need arises. They must be proportionate to the harm they counter, and must be targeted and temporary (i.e. only apply as long as the breach prevails).

What is the role of the Union interest in the operation of the instrument?

The Union interest is an essential consideration of the ACI, in particular at the stage of the Union's response measures. Any response measure must be in the Union interest, the selection and design of the Union's response measures is to be made in light of the Union interest, and the Union interest must be considered in any suspension, amendment or termination of such measures.

A dedicated article spells out the process of determination of the Union's interest. The Union interest refers to various interests taken as a whole, including, primarily, the preservation of the ability of the Union and its Member States to make legitimate sovereign choices free from economic coercion, as well as all other interests of the Union or the Member States specific to the particular case at stake, interests of Union economic operators, and of final Union consumers, affected, or potentially affected, by the economic coercion or by the Union's response measures.

Criteria for selection and design of Union response measures

The Regulation provides for a series of objective criteria for selection and design of the Union's response measures. The leading criteria concern the effectiveness of the measures in obtaining the cessation of the coercion and the reparation of the injury, where requested, as well as the avoidance or minimisation of potential negative economic or other effects on the Union and operators, for instance, on the investment environment or the knowledge economy.

In addition, there are a series of requirements for the measures to comply with, such as taking account of the Union interest, other Union policies and objectives, any relevant action pursuant to the Union’s common foreign and security policy, as well as the avoidance of any interference with administrative decisions based on the evaluation of scientific evidence and avoidance of disproportionate administrative complexity and cost.

Injury reparation

The Regulation provides for a framework for the Union to request, where appropriate, that the coercing country repairs the injury caused by its economic coercion. The injury refers to injury suffered by the Union, Member States or economic operators. The Commission may also apply Union response measures to enforce reparations, where appropriate.

The Council decides whether the right to reparation is to be pursued, on a proposal from the Commission. The Commission then acts on that basis.

Does the ACI foresee cooperation with other partners?

Yes, it does. In cases where the ACI would be used, the EU can coordinate with other countries affected and with like-minded partners and allies. It could always raise issues of coercion in any relevant international fora, A recital in the proposed Regulation also says that the EU is to contribute to international efforts to act against economic coercion. This is reflected in the EU’s involvement in the G7, as illustrated by the outcome of the G7 Summit in Hiroshima.

How does the ACI relate to the G7 statements on economic coercion? 

The strong G7 and other positions expressed against economic coercion provide welcome support for the EU’s stance expressed in the ACI. Also, the G7 is a forum in which the EU can implement its commitment to international cooperation in this area.

Under the Regulation, the EU should support and cooperate with third countries affected by the same or similar coercion or other interested third countries. Likewise, the EU should participate in international coordination in bilateral, plurilateral or multilateral fora that are geared towards the prevention or elimination of economic coercion.

The Hiroshima Summit on 20 May 2023 featured a Leaders’ Communiqué and a Statement on Economic Resilience and Economic Security. G7 leaders committed to increasing the collective assessment, preparedness, deterrence and response to economic coercion, and further promote cooperation with partners beyond the G7.

G7 members intend to use early warning and rapid information-sharing, regularly consult each other, collaboratively assess situations, explore coordinated responses, deter and, where appropriate, counter economic coercion, as well as coordinate, as appropriate, to support targeted states, economies and entities as a demonstration of solidarity and resolve to uphold the rule of law.

How does the ACI relate to the G7 'Coordination Platform on Economic Coercion', launched at Hiroshima on 20 May 2023?

This G7 Platform provides a tool for the international cooperation elements of the Anti-Coercion Instrument.

The legal basis for the EU to act will be the ACI when the EU or a Member State is coerced. The Commission will use the G7 Platform to gather and share information where this is relevant under the ACI. In a particular case, where the EU has advanced through the stages of the ACI then the G7 Platform is a way for the EU to cooperate internationally.

Decision-making under the instrument

The instrument operates on the basis of implementing and delegated powers. These offer sufficient flexibility and speed of action.

At the stage of the determination of the coercion, the Council will act by means of an implementing act on a proposal by the Commission.

At the stage of the Union's response measures, the Commission will assess the presence of the conditions for action and will adopt any Union response measures by means of an implementing act. The Member States assist the Commission in an examination procedure.

In specific circumstances, changes to the rules of origin could be done via delegated acts, with the respective involvement of the European Parliament and the Council.

Stakeholder involvement is crucial for the selection and design of the Union's response measures, notably where such measures may have an impact on specific groups. Relevant stakeholders (such as affected or potentially affected businesses) would have sufficient opportunities to come forward and make their views known and provide information in the concrete application of the instrument.

The Commission will keep the European Parliament and the Council informed of relevant developments throughout the process, including in the period in which the Union's response measures are in force.

Role of stakeholders

Stakeholders are involved through the information-gathering exercise that accompanies the selection and design of the Union's response measures.

Stakeholders have the opportunity to come forward and provide their input as regards options for Union response measures, but they can also come forward earlier in the process and submit information as regards instance of economic coercion. The Regulation sets out rules for confidential treatment.

For submissions of relevant information, stakeholders are invited to visit the Single point of contact for the ACI.

Timeframe

The procedure foreseen in the instrument, once activated, will be subject to a timeframe. The timeframe in the regulation aims to enhance predictability, effectiveness and deterrence. More notably, the Commission would normally have four months to complete an examination of any third-country measure, the Council would normally have maximum eight to ten weeks to act on a Commission proposal for an affirmative determination, and the Commission would consider Union response measures within six months.

The timeframe is indicative, so that the Union is able to manage potential sensitivities. At the same time, there should be no undue delay in the procedure and the Union should act with a certain expeditiousness.

Single point of contact for the ACI

A single point of contact is established to assist in the application of this instrument. For more information, stakeholders are invited to visit this page.

Next steps in the legislative process, and reviews

The adoption, publication and entry into force of the regulation complete the ordinary legislative procedure.

The first review of the regulation is due by December 2028, or three years after the first implementing act on determination, if it takes place earlier. Subsequent reviews will take place every five years thereafter.