INTRODUCTION

Member States have recently been subject to coercive practices, notably in the fields of economic policy (digital tax, solar panels, Huawei and 5G), foreign policy (Iran) and energy policy (NordStream2). Such measures take several forms and, through economic sanctions or blackmail, aim at wringing out a determined behaviour from the targeted State in the essential spheres of their sovereignty.

These actions interfere with the freedom of States to freely define their policies in accordance with their international commitments, and encroach on the exercise of their sovereignty, often in strategic sectors. In theory, each State is recognised as having this sovereignty. However, this sovereignty must be "operational", absent which it is an empty shell.

Absent an existing adequate tool, the Commission opened the consultation process concerning the adoption of an anti-coercion instrument ("ACI") on 23 March 2021. Following the consultation, the Commission published its proposal for the Regulation on 8 December 2021. The ACI sets out a list of countermeasures that may be adopted to deter and counteract coercive action on part of third countries in order to guarantee the EU's rights to define and implement its policy choices, as well as the procedures for doing so.

The ACI aims at complementing the EU's toolbox to (re)act on the international arena, in conformity with international law. The key objective is deterrence of coercive action in the first place. Thus, the proposed countermeasures are strong: restricted access to the European market, erection of high tariff barriers, or exclusion from public procurement are there to discourage coercive action. It is, however, a means of last resort. Prior consultation with the aggressor State and the possibility for it to withdraw measures thus have to be explored first. Second, prior to the adoption of countermeasures, consultation with stakeholders and assessment of the efficiency and possible escalation must also be considered. Finally, countermeasures must be proportionate and the resolution of the conflict through international fora must be pursued in parallel of their application. Countermeasures must be withdrawn as soon as the originating action has been terminated.

THE COMMISSION'S PROPOSAL FOR AN "ANTI-COERCION" INSTRUMENT

The Commission's proposed anti-coercion measures would be triggered whenever 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 particular taking into account the "intensity, severity, frequency, duration, breadth and magnitude of the third country’s measure and the pressure arising from it" and the extent to which sovereign rights are affected (Article 2).

Autonomous capacity to promptly react

Absent relevant international rules, or in the face of violations of existing rules, Europe must be equipped with an autonomous capacity to promptly react to coercive measures by third countries. This is not an alternative to international reforms, but to safeguard Europe's position, at least until new relevant rules can be adopted.

The choice of Article 207 TFEU as the legal basis for the proposed ACI sets it under the EU's commercial policy. The proposed ACI allows the Commission to adopt countermeasures through implementing acts, increasing the potential for rapid counteraction. The Commission adopts the delegated acts after consulting a group of experts and subject to a vote in accordance with the examination procedure of the Comitology Regulation (negative qualified majority needed to prevent adoption).

When the Commission makes a formal finding that the actions identified constitute coercion (Articles 3 and 4), in accordance with international law, the Commission should then grant the aggressor country an opportunity to withdraw its coercive actions, prior to adopting countermeasure (Articles 5 and 7). If the coercing country refuses to desist, the Commission sets a deadline by which the third country must abide. In parallel, it defines the countermeasures that may be adopted. Before doing so, the Commission must carry out a consultation of stakeholders prior to the adoption of any measures under the proposed ACI.

Where coercive action has not ceased by the lapsing of the deadline, countermeasures enter into force. Such measures would be withdrawn as soon as the coercive action ceases or where the application of countermeasures is no longer in the Union interest (Article 10(4)), and the issue would be addressed through international fora while countermeasures are in force.

Autonomous capacity for unified reaction

Internal divisions lead to separate and ineffective reactions because they lack force and, consequently, credibility. There is a single market, there must be a single, unified, reaction. In furtherance of this objective, the proposed ACI is placed under the Union's trade policy, which should ensure unity of action.

Autonomous capacity for credible reaction

The European countermeasures cannot be a "paper tiger" as we have seen with the Blocking Regulation and the INSTEX mechanism in the area of extraterritorial sanctions. Absent a genuine reaction capacity, coercive practices of third countries will become increasingly aggressive. For countermeasures to be credible, they should:

1. be adopted at the level of the entire single market: It is only by exploiting its position as the largest trading bloc in the world that Europe can really dissuade third countries from adopting coercive practices against European countries (as the U.S. leverages access to the U.S. market with regards to sanctions).

2. hit where it really hurts: They must be specific, precise and defined in advance in order to avoid the creation of distortions in the markets and ensure their legality under international law. The Commission's proposed ACI contains the following possible countermeasures listed in Annex I: suspension of international obligations and:  

• increased customs duties and restrictions (quotas, licenses, others) on the import, export or trade of goods (in transit); restrictions on trade in services; foreign direct investment; IP rights;

• suspension of public procurement concessions;

• restrictions for banking, insurance, access to Union capital markets;

• suspension of food and chemical safety authorization procedures;

• restrictions on Union-funded research programmes;