On 3 October 2023 the European Parliament voted to pass the EU Anti-Coercion Instrument (ACI), billed as the ‘shield protecting EU’s sovereignty,’ by an overwhelming majority of 578 votes in favour, and only 24 votes against and 19 abstentions. Given the political agreement concluded between the Parliament and Council on 6 June 2023, the ACI is expected to enter into force by November after the Council’s formal approval, which is still expected in October. The ACI is part of the EU’s arsenal of trade defences to make Europe ‘resilient’ in the era of geoeconomic rivalry between the US and China. That is, to persevere its ‘strategic autonomy’ against ‘weaponised interdependence’ by its economic partners, in simple terms ‘economic blackmail.’
This post starts by analysing the notion of ‘economic coercion’ under the ACI. It then questions whether purported coercive economic measures by China that the ACI wishes to counter would indeed constitute the ACI’s own definition of economic coercion. Finally the post will reflect on the divide between the geoeconomic and international law understanding of economic coercion and the possible conflation of the notions of ‘strategic autonomy’ and sovereignty in crafting the ACI.
The notion of ‘economic coercion’ under the EU Anti-Coercion Instrument
The ACI rests on the presumption that the EU may undertake countermeasures against unlawful economic coercion by a third state against an EU member state or the Union itself. The regulation avoids being polemic by narrowly defining economic coercion for the purposes of the regulation in Art. 2 (1) ACI as existing where:
‘a third country applies or threatens to apply a third-country measure affecting trade or investment in order to prevent or obtain the cessation, modification or adoption of a particular act by the Union or a Member State, thereby interfering in the legitimate sovereign choices of the Union or a Member State.’ [emphasis mine]
According to Art 1(3) the ACI shall be ‘consistent with international law.’ The ACI’s Preamble (para. 5) explicitly references the ‘principles of sovereign equality and non-intervention’ in the Friendly Relations Declaration. Moreover, the Preamble details that: ‘no State may use or encourage the use of economic, political or any other type of measures to coerce another State in order to obtain from it the subordination of the exercise of its sovereign rights and to secure from it advantages of any kind, which reflects customary international law.’ As such, the phrase ‘interfering in the legitimate sovereign choices’ in Art. 2(1) can be taken to mean an interference in the domaine réservé.
Thus, economic coercion under the ACI can be interpreted as a violation of the principle of non-intervention, in line with the ICJ’s reasoning in Nicaragua (para. 205). It is important to bear in mind that under international law there is no ‘stand-alone’ prohibition of economic coercion independent of the principle of non-intervention (see also Tzanakopoulos), and indeed the ACI’s definition of economic coercion does not attempt to suggest otherwise.
As such, Art. 2(1) ACI reflects the elements of unlawful intervention through economic coercion: (i). an interference through ‘measures affecting trade or investment’; (ii). in a state’s ‘legitimate sovereign choices’ (i.e. domaine réservé); (iii) to compel or prevent a state against its sovereign will to/from a course of action. The elements constituting ‘coercive measures’ are defined in Art. 2(2), which include intensity, frequency, magnitude (lit. a), pattern of interference (lit. b), and extent of encroachment on a member state’s sovereignty (lit. c).
It must be noted that an act of economic coercion against a state does not necessarily need to target economic policy choices in the domaine réservé. Rather, the coercive economic measure serves to inflict ‘injury, i.e. economic damage [Art. 1(2)] on the EU, its member states or ‘Union economic operators’ [Art. 3(3)], such that the targeted state is compelled towards a ‘legal or other act, including an expression of a position’ [Art. 3(2)] in any domain, such as political, social, and cultural systems. Accordingly, the object of economic coercion is any matter within the targeted state’s ‘legitimate sovereign choices’ rather than just economic policy choices.
Is it only economic coercion when rivals threaten our ‘strategic autonomy’?
The EU has consistently highlighted China’s slashing of Lithuanian imports by 90% and exclusion of Lithuania from the Chinese customs system in response to the opening of the Taiwanese representative office in Vilnius as the cause célèbere for the ACI’s adoption (see here, here, here). Other examples mentioned in a EU Policy Briefing on China’s Economic Coercion are ‘popular boycotts’ against foreign cooperations taking a stand against the situation in Xinjiang or Hong Kong, tourism restrictions, administrative fines on foreign companies operating in China, and FDI restrictions.
With the exception of ‘coercive’ measures against Lithuania, which could be seen as compelling Lithuania against its sovereign will to alter its diplomatic relations with Taiwan, thus constituting a possible interference in Lithuania’s foreign policy choices (part of its domaine réservé, see Nicaragua, para. 265), in the other examples there is no obvious ‘interference’ through coercion. Even the EU Policy Briefing (pg. 3) acknowledges that these coercive measures are undertaken to ‘increase [China’s] leverage on issues such as territorial and maritime disputes […] or to protect its security interests.’ Thus, beyond aims to increase political pressure and protect China’s own interests, it is not straightforward how its economic measures carry the coercive intent to interfere directly with the ‘legitimate sovereign choices’ of the EU or its member states.
Consequently, the ACI is being presented as first and foremost a ‘deterrent instrument’ against China’s future economic coercion. As such, one could expect that for pragmatic reasons scrupulous attention to the public international law contours of ACI’s invocation of economic coercion as prohibited intervention can be shelved until the moment of ‘last resort’ arises for the EU to undertake the countermeasures set out by the ACI (Preamble, para. 8).
The EU’s attempt to broach its geoeconomic interest of ‘strategic autonomy’ with the public international value of sovereignty, leads us to question whether perhaps we might be holding on to an anachronistic view of sovereignty (see Raustiala). In a previous post, I suggested that weaponised interdependence rationales may mean rules on economic coercion should be re-conceptualised as a matter of ‘anti-competitive’ instead of ‘interventionist’ behaviour. Thus, the EU’s ‘strategic autonomy’ rationale is rather a demand that economic partners engage in ‘fair play’ (granted that serves its geoeconomic interests) and not genuinely a matter of sovereignty. The next section shows how the ACI unwittingly conflates the notions of freedom to act and sovereignty.
The divide between geoeconomic and international law understanding of economic coercion in the ACI
The ACI is designed to counter practices of economic coercion which ‘unduly interfere with the legitimate policymaking space of the EU and its Member States and undermine the EU’s open strategic autonomy’. The EU defines ‘strategic autonomy’ as ‘the capacity of the EU to act autonomously – that is, without being dependent on other countries – in strategically important policy areas.’ It is not obvious how this fuzzy ideal of not ‘being dependent on other countries’ – a pipe dream in the current international economic order – would be protected by the principle of non-intervention relied on by the ACI.
Further, the policy rationale of ‘strategic autonomy’ is linked to the ‘European Economic Security Strategy’ aimed at supply chain resilience, security of critical infrastructure, technology security and prevention of weaponisation of economic ties. It is challenging to imagine how these manifold aims are protected by the principle of non-intervention. In these policy-making areas there are multiple inroads made by the EU and its member states’ international obligations under the WTO and TRIPS regime. Thus, the domain réservé in this regard is not only reduced due to existing international law obligations (Ziegler, Milanovic) but also factual interdependence (Bagwell/Staiger, Sabel, Krasner).
As states’ economic fates are intertwined, every economic act of one state could potentially interfere in the (economic) decision-making of another state. In an increasingly networked but also polarised world EU policy-makers are not unjustified in identifying that the risk of weaponised interdependence has become ever more pertinent in defining the limits of states’ exercise of their coercive economic power. However, unless we assume that the EU intends to interpret and apply the ACI’s notion of economic coercion and sovereignty to go beyond current international law, under the existing framework there is neither an explicit stand-alone prohibition of economic coercion nor an understanding of sovereignty, protected under the prohibition of non-intervention, that would encompass the geostrategic interest of ‘not being dependent on others.’ To borrow a platitude: ‘No sovereignty in solitude.’
Conclusion
Consequently, the ACI reflects an effort of the EU to patch together its geoeconomic interest of strategic autonomy with the (distantly) related international law value of sovereignty. However, it remains to be seen how and whether in practice the Commission will eventually bridge the disconnect between the EU’s broad interest of strategic autonomy and the ACI’s narrow legal contours of economic coercion as an unlawful interference.
The ACI may indeed ultimately serve only the purpose of signalling to its economic partners that the Union will not tolerate economic ‘bullying’ and ‘blackmail.’ However, in questioning the coherency of the ACI’s invocation of the prohibition of intervention through economic coercion to maintain its ‘strategic autonomy,’ it is evident that protection of sovereignty is subject to geopolitical winds and how they influence the configuration of states’ power in relation to one another.
The new geopolitical climate has unnerved the EU’s – to a larger extent Western states’ – sense of comfort in their long-held economic leverage over other states. The notion of economic coercion is opaque and malleable, thus serving whichever ‘powerful’ states capable of justifying its lawfulness for their own interests or invoking its unlawfulness to undermine its economic rivals (Whyte, see also Bâli, Nanopoulos). Developing states have historically expressed their conviction as to the unlawfulness of economic coercion, and how it encroaches upon their sovereignty, but as it is with the determination of the content and application of international law norms, some states inevitably leave ‘deeper footprints’ on such determinations than others, and the ACI may be a reflection of that truism.
Source: EJIL:Talk!
