On 23 March 2021, the EU opened a public consultation (the “Consultation“) on its plan to introduce a new mechanism to deter and counter potentially coercive actions by non-EU countries which seek to pressure the EU or its member countries into taking or withdrawing particular policy measures, and which impact the economic and geopolitical interests of the EU and its Member States. According to the EU, the new legal instrument will be designed to “empower the Commission to apply trade, investment or other restrictions towards any non-EU country unduly interfering in the policy choices of the EU or its Member States”. The twelve week Consultation sought views on (i) the circumstances in which the EU may act; (ii) the types of measures the EU may employ to tackle coercion; and (iii) the likely impact of the various options.
On 7 September, the EU published a report detailing the results of the Consultation. Overall, the proposed mechanism was generally well received by the stakeholders. In response to the 32 questions, the Commission received more than 50 reactions and 12 position papers, primarily from France, Belgium and Germany.
Notable stakeholder conclusions:
- Business associations and companies reacted broadly in favour of the definition of coercive practices by non-EU countries (and the instrument itself). However, some respondents requested for the scope of the measure to be broadened to cover coercive actions specifically against private economic operators and extra-territorial sanctions, because of the significant economic implications.
- Stakeholders referred to examples of non-EU countries, namely China, Russia, Indonesia, Turkey, Tunisia, Libya, Nigeria, and the US, which have legislation either specifically designed to impose coercive measures on other countries or legislation that can be used for imposing coercive measures. China was flagged as being of particular imminent concern.
- Business associations, EU citizens, trade unions and academics/think tanks generally felt that there was a pressing need for the instrument. Almost all responses also stated that the Covid-19 crisis had made the situation more challenging.
- Respondents were divided between those who saw the need for a threshold for the use of the instrument and those who did not.
- Stakeholders were split over the question of compensation to EU businesses for both damage suffered due to the coercion and for damage suffered due to EU countermeasures.
- Almost all business associations rejected the idea of the EU using a policy instrument to take countermeasures in any case of coercion. Most agreed with the idea of using the instrument only when the coercion breaches international law, after an attempt at a negotiated or diplomatic solution, leaving countermeasures as a last resort. These stakeholders were also supportive of the option of using the mechanism only when the coercion has significant negative economic impact or effect.
- Business associations noted that the deterrence effect would be the highest value of the instrument and that it should help EU businesses tackle the legal uncertainty deriving from the different coercive measures that can be adopted. They also observed that, as well as an instrument, the EU must adopt a global and common strategy to address coercive practices.
The Commission is set to present the new instrument this autumn as part of its Open Strategic Autonomy trade strategy. Member states will then decide whether to approve the mechanism.