The European Union needs an anti-coercion instrument given the reality of an increasingly harsh geopolitical landscape, writes Bernd Lange in a guest contribution for Borderlex. An effective instrument requires a comprehensive definition of economic coercion and more international coordination with like-minded countries.
There is no question that a rules-based and fair global trade order is in Europe’s vital interest. Developing this order within the framework of the World Trade Organization must be one of the cornerstones of European Union trade policy. But as the past days, weeks and months have demonstrated, this alone is not enough.
We are increasingly confronted with situations in which states deliberately undermine this rules-based order for their own interests. Trade policy is increasingly weaponised.
Recent geopolitical tensions have made it abundantly clear that it will be of paramount importance for the European Union and its member states to be able to defend their own room for manoeuvre and interests. This includes resolutely defending themselves against external pressure.
The EU and its member states have been the target of several attempts at coercive action recently. Worryingly, Europe became a target of close allies – as well as more belligerent third countries.
The US threatened to impose punitive tariffs on French products to deter Paris from imposing a levy on digital services.
China’s trade policy also uses coercive measures – most recently, for example, the blockade of all imports from Lithuania because the “breakaway province” Taiwan has opened its own diplomatic representation there. And the trade war with Australia has been in response to Canberra’s demand to have the origins of COVID-19 investigated by independent scientists.
Beijing uses disinformation campaigns to cover up the oppression of the Uighur minority in Xinjiang province and punishes people who point out human rights violations there. Another popular tool used are “spontaneous” boycotts of Western brands that are part of the Better Cotton Initiative for sustainable cotton production.
Last but not least, the People’s Republic bans European parliamentarians critical of China from entering the country or conducting business there. The list of examples could be continued, for example with the Russian import ban on agricultural goods, especially from Poland.
In particular, Washington’s threat to crack down on the digital tax has led to a debate in Brussels about obvious gaps in the EU’s toolbox. How can we realise the guiding principle of “open strategic autonomy” if we do not have the means to guarantee sovereign decisions as well?
A first step towards closing this gap was taken with the modernisation of the so-called Enforcement Regulation. The EU can now, for example, take countermeasures if third countries block dispute settlement before the WTO. The regulation is a first, important step in the right direction.
At the initiative of the European Parliament, the EU has committed itself to developing a further, complementary instrument. This Wednesday is the day when the European Commission will follow up and present a draft of a new Anti-Coercion Instrument.
With this mechanism, the Union will be able to defend itself against attempts by third countries to force political decisions.
The instrument is a departure from business as usual in Brussels. The EU has always relied on global cooperation, partnership and compromise – and not on an expansive arsenal of defensive trade policy instruments. Nevertheless, or perhaps precisely because of this, the anti-coercion instrument is so important. The European Union must recognise the reality of an increasingly harsh geopolitical landscape.
Making it work
As rapporteur for the European Parliament, I think it is vital that we establish clear rules with real consequences for aggressive and coercive behaviour of third countries – primarily as a deterrent.
We need a comprehensive definition of coercive practices and a swift procedure to determine whether a measure in question is in fact coercive.
It would also make sense to introduce a certain automaticity into the instrument – we will want to minimise the possibility of the EU and its member states being divided over taking decisive action.
Of course, we also need a comprehensive catalogue of possible countermeasures that can be taken in response to aggressive and confrontational behaviour by third countries. Those who exert coercion on the EU will face a cost.
If several states are affected by trade policy initiatives that are used against them as a political weapon, it would make sense to coordinate political or even economic countermeasures – and thus increase their effectiveness. This includes coordinated action in multilateral institutions.
The time to act is now: those who are unable to resolutely confront coercion by third countries will allow others to dictate their policies. We will not allow this to happen.
Bernd Lange is chair of the European Parliament’s International Trade Committee and rapporteur on the new EU anti-coercion instrument.