 | Source: Chartered Institute of Export and International Trade |
| Overview | The official name is the Anti-Coercion Instrument (ACI). It was adopted by the EU in 2023. It is EU's strongest anti-coercion trade tool. It is designed to deter pressure from foreign powers. It was originally developed as a deterrence tool against China's use of trade restrictions. China has restricted trade to Lithuania over its ties with Taiwan. It aims to protect the EU and its members from coercion by third countries. | As of today, the ACI has not been used. But in earlier this year, EU leaders weighted to use it for the first time. They considered using it, not against China, but against the U.S. It was in response to the Greenland crisis. | Conditions to justify its use | The measures within the ACI can be applied in a situation in which a third country seeks to pressure the EU, one of its member states or corporations. This pressure would aim to make a specific policy choice by applying or threatening to apply measures that would harm trade or investment. These measures include tariffs, boycotts or import bans. | | Claim Your Starlink | This is a critical and time-sensitive message.
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| | Key measures | ACI creates penalties for the coercive state. Key measures include: | New or increased tariffs or additional charges on imports/exports, Restrictions on trade in goods and services (quotas, licensing requirement, export controls, transit controls, limits on shipments of certain goods), Limits on access to public programs (exclusion of suppliers from EU public contracts), Limits on access to financial markets (banking, insurance, access to EU capital markets) Measures affecting intellectual property rights (limiting IP protections or the commercial exploitation for rights-holders, revocation of IP rights previously guaranteed), Restrictions on foreign direct investments.
| It also provides a framework for seeking reparation from coercive states. These reparations aim to make up for the damages caused to EU members. | Process | The EU Commission examines a potential case of coercion. This can happen either on its own initiative or following a request. It then submits a proposal to the Council of the EU to assess whether coercion exists. | Under the ACI, veto power is removed. Coercion confirmation and trade measures are taken through qualified majority votes. This means the decision must be approved by at least 15 EU member states together representing 65% of the EU population. If the Council confirms coercion, the Commission first engage with the coercive state to find a solution to settle the issue. This happens through negotiation or mediation. | If this process fails, then the EU may adopt response measures. These measures will be proposed by the Commission to the Council. And then, the measures must be adopted through qualified majority vote. | It is nicknamed "trade bazooka" because this process should allow rapid and powerful retaliation with a broad scope of measures. This is quite unusual for EU's slow trade tools. | Limits | But let's keep in mind that "rapid" is a relative notion. The first step (the examination by the Commission) can last up to four months. The second step (consultation with the Council and first vote) contains no strict time limits. Neither does the consultations with the coercive state to find a settlement. And if the measures are approved, twice, by the Council, they can be up to three months from the date of their adoption. It is a relatively rapid process. But it can still take months to be applied depending on the time each step takes. Plus, the adoption requires a qualified majority approval. This means 15 member states representing 65% of the population must align. This can be hard to get within the EU. Members often struggle to align given their diverging interests. This aspect could prevent or delay the response measures. Plus, the measures must also be compatible with the WTO rules and internal single market law. | Also, enforcement may be uneven. The EU can design measures. But implementation often relies on national authorities. Then, political will and administrative capabilities can vary within the EU. This would depend a lot on national interests and relations with the coercive state. | Another aspect that could constrain the ACI's use is the risk of escalation and trade war. The measures could trigger retaliation. This could harm export-dependent EU sectors. This risk could prevent some members from adopting the measures. | The EU's "trade bazooka" therefore acts more as a deterrent and signaling tool than a routinely deployable trade weapon. It would be effective and rapid if backed by unity and coordination. But this might be hard to reach in the EU. | Decoding geopolitics isn't a job. It's survival. | Joy |
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