MEPs back new trade instrument to protect the EU from economic blackmail

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Trade Committee MEPs backed a new tool for the EU to respond to countries seeking to coerce it or member states.

The committee adopted its negotiating position on the proposed anti-coercion instrument with 34 votes for, zero against and six abstentions on Monday evening.

Uphold the Union interest

The new tool is designed to protect the EU’s strategic and economic interests. It will help the EU to retaliate in case it or a member state experiences economic blackmail by a non-EU country to a particular policy choice or stance, such as an EP resolution. MEPs agreed that the primary goal of the new instrument should be to dissuade non-EU countries from attempting coercion or to get them to halt an attempt at coercion, and avoid escalating the conflict.

Possible EU responses as part of these new tools could include, for example, a suspension of tariff concessions or of certain international obligations the EU has to the non-EU country. MEPs stress that its use must be a last resort, once other avenues, including direct negotiations, mediation and international adjudication, have been exhausted. EU measures must also be commensurate to the negative impact on the EU or the member state concerned, and the rules-based multilateral trading system, with the World Trade Organisation at its core, must be preserved, MEPs insist.

Repair the injury

In their vote, MEPs extended the scope of the proposed legislation to include measures to “where appropriate, repair the injury”.

Binding tasks, deadlines

Trade MEPs strengthened the binding nature of the procedure. They also introduced deadlines for deciding on whether an instance of coercion has been identified and for the adoption of a response, to make sure the procedure is nimble enough to avoid administrative delays.

Compatibility with the reformed blocking statute

The Trade Committee also proposes a review in three years to check the new measure’s compatibility with the EU’s blocking statute which is currently under review and which protects the EU against the extraterritorial effects of third country law.

Quote

“Today’s vote brings us one step closer to ensure that decisions in Europe will not be influenced by third countries trying to force their will on us. Unlike, for example, the US government’s section 301, the anti-coercion instrument is a defensive, reactive instrument, and a measure of last resort – we are underlining this important aspect in our position. We also think the EP and member states should play a more substantial role in determining the EU’s response to coercion, so the EU speaks with one voice. I am looking forward to making substantial progress towards a compromise about the final act under the Czech presidency this year,” says Rapporteur Bernd Lange (S&D, DE), the Chair of the Trade Committee.

Next steps

The draft report will serve as the mandate for negotiations with the member states, if there are no objections to it at the plenary session of 17-20 October. Talks can start as soon as Council adopts its position.

Background

The Commission published its proposal about the anti-coercion instrument on 8 December 2021, upon the request of the Parliament and the Council. The new deterrent will fill a gap in the EU toolkit against countries trying to restrict trade or investment to force a change in various EU policies.

Parliament denounced in several resolutions the People’s Republic of China’s economic coercion of Lithuania in response to a Lithuanian policy decision, among others, in January, February and September 2022.