European Council Adopts New Tool to Address Coercive Trade Practices
The European Council adopted the "Anti-Coercion Instrument" Oct. 23 -- a trade tool meant to disincentivize the use of coercive trade and investment measures "through dialogue." Should the dialogue fall through, the instrument allows for the EU to impose countermeasures, including trade restrictions, via "increased customs duties, import or export licences, restrictions on trade in services or access to foreign direct investment or public procurement."
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The European Parliament passed the new legislation earlier this month in a bid to target economic coercion, whereby a foreign nation seeks to pressure the EU into making a specific choice by applying or threatening trade measures (see 2310030018). Parliament said this type of coercion is not addressed by the World Trade Organization or its dispute settlement system, noting that any actions taken under the instrument are consistent with international law and obligations.
The council said that it will have "significant involvement in the decision-making process" by determining where economic coercion exists. After this step, the European Commission will have "implementing powers" in deciding the bloc's response. The council said coercive practices may be found where a country "applies or threatens to apply a measure affecting trade or investment in order to prevent or obtain the cessation, modification or adoption of a particular act by the Union or a member state."
The regulation is expected to be signed Nov. 22 and will enter into force 20 days after being publicized in the Official Journal of the EU.