In an era of growing global economic rivalries, the EU’s new Anti-Coercion Instrument (ACI) aims to shield the EU and member states from coercive pressure by third countries. Entering into force on December 27, 2023, the Regulation on the protection of the Union and its Member States from economic coercion by third countries (EU Regulation 2023/2675), known as the ACI, was published in the EU Official Journal on 7 December 2023.¹

The ACI considers “economic coercion” as a situation where a third country uses its economic power to threaten or coerce another country. While the new tool primarily relies on dialogue and engagement to discourage economic coercion from a third country vis-à-vis the EU, it also empowers the EU to retaliate across various spheres, including trade, investments, and financing. Furthermore, the ACI seeks to recover injury caused to the EU by third-party conduct actions.

Determining economic coercion

According to the ACI, economic coercion exists when a third country interferes in the legitimate sovereign choices of the EU or a member state by applying or threatening to apply a third-country measure that affects trade or investment in order to prevent or obtain the cessation, modification or adoption of a particular choice or act.

There are a number of conditions that will be analyzed when determining whether a third country has committed economic coercion; they include, for example:

• The intensity, severity, frequency, duration, breadth and magnitude of the third-country measure, including its impact on trade or investment relations with the EU and the pressure arising from it on the EU or a member state
• Whether the third country engages in a pattern of interference as a way to prevent or obtain particular acts from the EU, a member state or another third country
• Whether the third country acts on the basis of a legitimate and internationally recognized concern, etc.

Commission empowered to assess potential coercion

Third-country measures that are potentially coercive will be examined by the European Commission—based on substantiated information gathered at its own initiative or from reliable sources. The examination process will normally not exceed four months.

If economic coercion is determined, the Commission has six months to submit its proposal to the Council for an implementing act. This may include, where appropriate, a request to the third country to repair the injury. Assessment of the injury is based on the nature and extent of the damage caused and the general obligation under customary international law to make full reparation for injuries caused by an internationally wrongful act. Any implementing act that is adopted will be published in the Official Journal of the European Union. 

EU response measures

There are several EU response measures set out in the annexes of the ACI; for example the EU could: 

• Impose new or increased customs duties or introduce additional charges on the import or export of goods
• Impose measures that affect (i) trade in services, (ii) access of foreign direct investment to the EU, banking and insurance, (iii) access to EU capital market and other financial service activities
• Introduce or increase restrictions on the possibility to place on the EU market goods falling under EU legal acts on chemicals, etc.

EU response measures must be proportionate and may not exceed the level of injury caused to the EU, considering the gravity of the economic coercion, its economic impact on the EU or a member state and the rights of the EU and its member states.

What’s Next?

As summarized above, introduction of the ACI empowers the EU to address economic coercion from third parties at the governmental level. Until now, the EU was unable to effectively respond to economic coercion from third parties due to its adherence to international agreements and the lack of a clear legal mechanism for retaliation. Once it has entered into force at the end of this year, the ACI will serve as a shield to protect the EU’s sovereignty against arbitrary actions by a third country. 

Dentons’ Trade team will continue to monitor and update you on the implementation of the ACI. Please feel free to reach out to your Dentons partner if you have any questions or require assistance in respect of the new instrument.

1. Regulation (EU) 2023/2675 of the European Parliament and of the Council of 22 November 2023 on the protection of the Union and its Member States from economic coercion by third countries, OJ L, 2023/2675, 07.12.2023