Protection of the interests of the EU and its Member States from economic coercion by non-EU countries

SUMMARY OF:

Regulation (EU) 2023/2675 on the protection of the Union and its Member States from economic coercion by third countries

WHAT IS THE AIM OF THE REGULATION?

The regulation introduces rules and procedures for European Union (EU) action to ensure the effective protection of the interests of the EU and its Member States from economic coercion by a third country (non-EU country). The primary objective is to deter non-EU countries from resorting to economic coercion. Where economic coercion takes place, the objective is to respond to the economic coercion with a view to stopping the coercion.

It sets out a framework for the EU to respond by:

examining and determining instances of economic coercion;
engaging with the non-EU country with a view to stopping the coercion in individual cases;
introducing measures to counteract the coercion as a last resort in individual cases;
seeking reparation for the injury caused by the economic coercion to the EU or its Member States.

KEY POINTS

1.
Examination and determination
Economic coercion exists where a non-EU 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 EU or a Member State, thereby interfering in the legitimate sovereign choices of the EU or a Member State.
In determining whether a measure by a non-EU country qualifies as economic coercion based on the above conditions, the European Commission and the Council of the European Union take the following into account:
- its intensity, severity, frequency, duration, breadth and magnitude, including impact on trade or investment relations with the EU, and any pressure arising from it on the EU or a Member State;
- whether the non-EU country in question is engaging in a pattern of interference seeking to prevent or obtain particular acts from the EU, a Member State or another non-EU country;
- the extent to which the measure encroaches upon an area of the EU’s or a Member State’s sovereignty;
- whether the non-EU country is acting on the basis of a legitimate concern that is internationally recognised;
- whether the non-EU country in question has made serious attempts in good faith to settle the matter through international coordination or adjudication before introducing its measure.
The Commission may examine any non-EU country measure, on its own initiative or following a duly substantiated request. The Commission’s examination must normally be completed within 4 months. The Commission carries out the examination based on substantiated information gathered on its own initiative or received from any reliable source, including Member States and stakeholders.
The Council determines the existence of economic coercion via an implementing act based on a Commission proposal. The Council has a maximum of 8 weeks to complete this step. The Council may take longer than 8 weeks (but in principle not more than 10 weeks), provided it informs the Commission of the reasons for the delay. The Council may also decide that the EU requests the coercing country to repair the injury caused by the economic coercion.
2.
Engagement
The Commission explores options to engage with the coercing country with a view to stopping the coercion and to obtaining the reparation of the injury, where applicable. The engagement with the coercing third country must be premised on good-faith efforts by that non-EU country.
3.
EU response measures
The EU imposes response measures, through Commission implementing acts, when three conditions are all met:
- efforts (e.g. engaging with the coercing third country) have not produced results within a reasonable time frame (namely, the non-EU country has not ended the economic coercion or has not repaired the injury, where applicable);
- the EU response measures are necessary to protect EU’s and Member States’ interests and rights in the particular case, in light of the available options;
- the EU response measures are in the EU’s interest.
Possible measures to counteract economic coercion include:
- new or increased customs duties;
- export and import restrictions, including export controls;
- measures applying to transiting goods or internal measures applying to goods;
- excluding suppliers, goods or services from public procurement, or applying score adjustments on tenders of goods or services;
- measures affecting trade in services;
- measures affecting the access of foreign direct investment to the EU;
- restrictions on the protection of intellectual property rights or their commercial exploitation;
- restrictions on banking, insurance, access to EU capital markets and other financial service activities;
- new or increased restrictions on the access of chemicals to the EU market;
- new or increased restrictions on the access of goods falling under the EU sanitary and phytosanitary legal acts to the EU market.
Those measures may amount to the non-performance of international obligations of the EU towards the coercing non-EU country where the economic coercion constitutes an internationally wrongful act.
The Commission relies on a set of objective criteria for the selection and design of appropriate EU response measures. A dedicated provision sets out the determination of the EU’s interest as regards EU response measures.
EU response measures may be measures of general application or may apply to persons connected or linked to the government of the coercing non-EU country.
The Commission implementing act on EU response measures provides for the following.
- It sets a deadline (within 3 months, as a rule) for the application of measures unless the coercing non-EU country ceases the economic coercion and, where appropriate, repairs the injury to the EU. The deadline is to be further extended if there is credible information that the coercing non-EU country is already taking steps to stop the coercion, so that the Commission can make that determination.
- It mandates that the Commission call on the coercing non-EU country to immediately stop the coercion and to repair the injury, where applicable; to offer to negotiate a solution with the third country; and to notify the third country that the EU response measures will apply unless the economic coercion ceases and reparations are made, where appropriate.
- Exceptionally, EU response measures will apply without the Commission first calling on the coercing country to stop the coercion and to repair the injury and notifying it of the application of measures where this is necessary, in particular for the effectiveness of the measures.
- Where the economic coercion consists of a threat of applying measures affecting trade or investment, EU response measures may apply only from the date on which the threat materialises.
The regulation provides that the Commission is to conduct information gathering to seek views and information as regards appropriate measures to be imposed in an individual case. This is an effective opportunity for stakeholders to provide their input, which the Commission is to take into account in the selection and design of appropriate measures.
The Commission may suspend, amend or terminate the EU response measures in the situations defined in the regulation, by means of an implementing act. Immediately applicable implementing acts are possible in cases of duly justified imperative grounds of urgency.
The Commission may continue efforts to resolve the issue in consultation with the coercing country, with the option of suspending the EU response measures.
4.
International cooperation
International cooperation with other non-EU countries may apply throughout the process and in parallel with other efforts to resolve the issue of economic coercion in individual cases. Consultations and cooperation may involve the exchange of relevant information and the coordination of the response or may take place in the context of the relevant international forums.
5.
Horizontal rules
The regulation grants delegated powers to the Commission to amend the rules of origin and nationality in Annex II.
It provides for the establishment of a single point of contact for stakeholders, sets out rules for the confidential treatment of information and establishes review and reporting obligations for the Commission.

FROM WHEN DOES THE REGULATION APPLY?

It has applied since 27 December 2023.

BACKGROUND

For further information, see:

Protection against coercion (European Commission)
Questions & answers regarding the Anti-Coercion Instrument – European Commission (European Commission)
Single contact point (European Commission).

MAIN DOCUMENT

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, 7.12.2023).

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