On 23 March 2021, the EU opened a public consultation (“Consultation“) on its plan to introduce a new mechanism to deter and counter potentially coercive actions by third countries which seek to pressure the EU or its member countries to take or withdraw particular policy measures, and which have impact on the economic and geopolitical interests of the EU and its member states. According to the EU, the new legal instrument will be designed to “empower the Commission to apply restrictions on trade, investment or other restrictions vis-à-vis any third country unduly interfering with the political choices of the EU or its Member States. ”The 12-week Consultation sought opinions on (i) the circumstances under which the EU may act; ( ii) the types of measures that the EU can employ to tackle coercion; and (iii) the likely impact of the different options.

On September 7, the EU published a report detailing the results of the Consultation. Overall, the proposed mechanism has been generally well received by stakeholders. In response to 32 questions, the Commission received more than 50 reactions and 12 position papers, mainly from France, Belgium and Germany.

Notable Stakeholder Conclusions:

• Trade associations and companies have reacted widely in favor of the definition of coercive practices by third countries (and of the instrument itself). However, some respondents requested that the scope of the measure be widened to cover enforcement actions specifically against private economic operators and extraterritorial sanctions, due to the significant economic implications.

• Stakeholders cited examples of non-EU countries, namely China, Russia, Indonesia, Turkey, Tunisia, Libya, Nigeria and the United States, which have legislation either specifically designed to impose coercive measures on other countries, that is, legislation that can be used to impose coercive measures. China was noted as being of particular concern.

• Professional associations, EU citizens, trade unions and academics / think tanks generally felt that there was an urgent need for this instrument. Almost all of the responses also indicated that the Covid-19 crisis had made the situation more difficult.

• Respondents were divided between those who saw the need for a threshold for the use of the instrument and those who did not.

• Stakeholders were divided on the issue of compensating EU companies for damage suffered as a result of coercion and for damage suffered as a result of EU countermeasures.

• Almost all professional associations have rejected the idea that the EU is using a political instrument to take countermeasures in the event of coercion. Most agreed with the idea of ​​using the instrument only when coercion violates international law, after an attempt at a negotiated or diplomatic solution, leaving countermeasures as a last resort. These speakers were also in favor of the option of using the mechanism only when the coercion has a significant negative economic impact or effect.

• Business associations noted that the deterrent effect would be the highest value of the instrument and that it should help EU businesses to tackle legal uncertainty arising from the different enforcement measures that can be adopted. They also observed that in addition to an instrument, the EU must adopt a comprehensive and common strategy to combat coercive practices.

The Commission is expected to present the new instrument this autumn as part of its business strategy of open strategic autonomy. Member States will then decide whether or not to approve the mechanism.