The EU’s Proposed Anti-coercion Instrument: Legality and Effectiveness

Abstract

The close integration of the world economy and global interdependence has introduced an opportunity for a foreign nation to interfere in the sovereign choices of a state through trade and investment restrictions. Economic coercion has been on an upward spiral and is painfully felt around the globe. The EU’s Anti-Coercion Instrument is an attempt to address this. Originally designed as an instrument to address the restrictive measures adopted by the Trump administration, the Instrument turned out to be a strong tool by which to respond to China’s economic coercion, stemming from Vilnius’ decision to accept Taiwan’s representative office. The European Commission tried to balance legality and effectiveness and decided to limit the definitional scope of economic coercion to that targeting the Union or its Member States, but the legality and effectiveness of the Proposed Regualtion are not unproblematic. In an era in which trade is being weaponized, normative power or civilian power does not help the EU to advance. The critical point here is how the EU can present a credible threat and withstand harm, as the pain from economic harm will first be felt by European economic operators and subsequently by European leaders.

Keywords: Anti-Coercion Instrument, Economic Coercion, Interference of Internal Affairs, Sovereignty, Countermeasures, WTO Dispute Settlement Mechanism

JEL Classification: F02