March 4. 2024. 6:32

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EU agrees on anti-coercion instrument to fight foreign interference

In the early hours of Tuesday (28 March), negotiators from the European Parliament and EU member states agreed on a common text for an anti-coercion instrument to help the bloc fight off attempts of economic coercion from third countries.

The instrument enables the EU to take countermeasures like import tariffs, trade restrictions, or public procurement measures against third countries that try to pressure EU member states or institutions to do their bidding.

The possibility of taking such coercive countermeasures instead of relying on a slow and unreliable World Trade Organisation (WTO) arbitration process is also expected to work as a deterrent.

“Sometimes it’s necessary to put a gun on the table, even knowing that it’s not used day by day,” Bernd Lange told journalists on Tuesday after the deal was done. The social-democratic MEP represented the European Parliament’s position in the negotiations.

Bringing a gun to trade negotiations

The chair of the European Parliament’s trade committee Bernd Lange argues that the EU needs more defensive instruments to safeguard its trade interests in an environment where multilateral trade rules are not respected.

The anti-coercion instrument was proposed by the European Commission in December 2021 after a year that saw multiple confrontations between the EU and China. In spring 2021, for example, Beijing sanctioned EU lawmakers and academics for their criticism of the persecution of the Uyghur minority in China.

In the winter of 2021, China took coercive trade sanctions against Lithuania after the Baltic country had allowed a diplomatic Taiwanese representation to open up shop in its capital.

Lithuanian exports to China as well as some essential imports from China were stopped by Chinese authorities.

A “stronger EU”…

Lithuania, therefore, was a strong supporter of the new instrument. Foreign Minister Gabrielius Landsbergis called it a tool “to stop dictators bullying the EU with unofficial sanctions” in a tweet celebrating the agreement between member states and the Parliament. “The EU just got stronger,” he said.

However, it is unclear whether the instrument will be used against China for its coercion attempts against Lithuania. An EU official showed himself rather reticent about the idea of opening negotiations on cases in the past, while the European Parliament’s Bernd Lange argued that it should also be applied to this case.

Under the final version of the text, the EU would have a maximum timeline of one year from the start of the investigation to to the decision on implementing countermeasures.

… but member states still have control

At the start of a procedure, the Commission would have to analyse and determine whether a third country’s behaviour amounted to coercion. Contrary to the initial proposal by the Commission, member states would then have to agree with the Commission’s analysis with a qualified majority.

This control was demanded by EU member states as some were afraid of an erosion of free trade principles and of the possibility of causing escalatory dynamics for trade wars.

If, however, a qualified majority of member states agree that a third country engaged in coercion, the Commission, EU member states, and the European Parliament would then be tasked with agreeing on a set of countermeasures to take against the country.

However, according to the EU Council, “the anti-coercion instrument is designed to de-escalate and induce discontinuation of coercive measures through dialogue”.

China and US as potential targets

Asked about cases in which the new instrument could be applied, Lange mentioned China and the US as potential targets, among others.

For example, the US threatened the EU with punitive tariffs in case the EU implemented a digital tax that would hurt large US corporations. Lange sees a potential use of the tool everywhere “where countries are thinking about using trade and investment tools as political weapons”.

The anti-coercion instrument still has to be formally adopted by the Parliament and by the Council, though this is usually considered to be a formality.

Then, the instrument that comes in form of an EU regulation will take effect 20 days after it is published in the Official Journal of the EU.