The new anti-coercion instrument should primarily have a deterrent effect, according to the European Commission, which presented its proposal on Wednesday 8 December.
“Our feeling is that, in many cases, the existence of a clear instrument to allow us to move to a final stage of countermeasures can have a deterrent effect and allow this coercion not to materialise or to cease”, explained an EU official.
The Commission proposes to have a tool to respond to situations where a third country “interferes in the legitimate sovereign choices of the Union or a Member State by seeking to prevent or obtain the cessation, modification or adoption of a particular act by the Union or a Member State by applying or threatening to apply measures affecting trade or investment”. In such circumstances, the Commission may adopt “ countermeasures” against the third country concerned.
“At a time of rising geopolitical tensions, trade is increasingly being weaponised and the EU and its Member States becoming targets of economic intimidation. We need the proper tools to respond”, said EU Commissioner Valdis Dombrovskis.
In this way, the EU intends to implement its strategic autonomy. The recent example of China, which is suspected of blocking Lithuanian exports (see other news), provides arguments for the EU to have such an instrument.
However, the proposal does not explicitly mention cases of extraterritorial sanctions imposed by third countries. For the Commission, it is the intention to economically harm the EU or one of its Member States that matters. In this sense, “it is possible that extraterritorial sanctions fall under this definition, but sometimes they don’t”, explained an EU source.
Possibility of actions
In concrete terms, the Commission plans to analyse cases of coercion, enter into consultations with the third country concerned and, once the intention to harm has been determined, adopt a delegated act imposing countermeasures in the event that the country has not withdrawn its measures. This final step requires prior notification to the country.
The Commission’s response may be commercial in nature, such as the withdrawal of tariff preferences or exclusion from public procurement, for example. However, it can also target European funding, outside of trade policy. For example, the Commission may suspend funding under certain programmes such as the Neighbourhood, Development and International Cooperation Instrument (NDICI).
Furthermore, the instrument can be targeted at individuals, as long as they have a link with the government of the third country concerned.
Deterrent effect
The Commission does not foresee a precise timetable for the stages of analysis, consultation with the third country and adoption of a delegated act. “We are not setting specific deadlines for response because the nature of economic coercion can differ quite broadly”, Valdis Dombrovskis told EUROPE. According to an EU official, “the absence of a timeline is justified. This allows us to go quickly, if necessary, (...) but in other cases we are able to be more slowly”.
However, the Commission is counting on the dissuasive aspect of the instrument and its procedure to make countries comply if they impose coercive economic measures.
Reactions
MEP Bernd Lange (S&D, Germany), Chair of the European Parliament’s Committee on International Trade, who will also be rapporteur for the text, welcomed the proposal. “There is a gap in our toolbox that others can exploit. With the tool presented by the Commission we will fill that gap”, he said.
His colleague Reinhard Bütikofer (Greens/EFA, Germany), who will be shadow rapporteur, said that there was “a great willingness in the European Parliament to work constructively and quickly to make the new anti-coercion instrument a reality. It would not only be suitable for self-defence against China, it would also allow an adequate response to coercive economic measures from other sides”.
On the Renew Europe side, French MEP Marie-Pierre Vedrenne, also shadow rapporteur, said she considers it “essential and positive the will to have the broadest and most flexible instrument possible”.
Her EPP colleague Anna-Michelle Asimakopoulou (Greece) said she was delighted with the tool proposed by the Commission, which, for her, was “broad and ambitious”.
The French Trade Minister, Franck Riester, also welcomed the Commission’s proposal. “We are determined to take this proposal forward during the French Presidency of the EU Council starting the 1st of January 2022”, he added.
See the Commission’s proposal for a regulation: https://bit.ly/3Gr0RCt (Original version in French by Léa Marchal)