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Freya Baetens delivers inaugural lecture: “The EU’s Anti-Coercion Instrument (ACI): lawful international countermeasures or violation of the WTO regime?”

Following her appointment to the Chair in EU External Economic Law earlier this year, Prof. dr. Freya Baetens addressed the academic community of Leiden University with her inaugural lecture on 27 October 2023. In a highly topical lecture, Prof. Baetens examined the EU’s Anti-Coercion Instrument (ACI).

The EU’s Anti-Coercion Instrument (ACI) aims to protect the “legitimate sovereign choices” of the EU and its Member States against third country interference via economic pressure. This new legal instrument will offer a last resort to address such economic coercion. In the week that the Council of Ministers endorsed the ACI, Prof. Baetens offered an insightful analysis of the ACI’s content; the broader legal and political context within which it was negotiated and will operate; and its place in the international trade law framework.

She argued that the ACI forms a space in general international law that is distinct from, yet supplemented by, the WTO regime. Treating the WTO regime as lex specialis that prevents any unilateral action in the trade sphere overstates that institution’s mandate, goals and scope. Any WTO-incompatibility of an EU countermeasure would be extinguished if and to the extent such countermeasure would be a response to a coercive measure that is illegal under public international law. This approach promotes the cohesiveness of international law and limits its fragmentation. The ACI therefore does not of itself conflict with the WTO regime; actions taken under it must be assessed holistically in light of international law.

Given the sweeping range of response measures envisaged in the ACI, the linkage with foreign policy, and the potential repercussions for individual Member States, it is no surprise that the allocation of power originally proposed by the European Commission, was altered by the Council, such that the final agreement allows a more equal approach, providing ultimate power to the Member States. Of course, these centrifugal tendencies had to be balanced against the recognition that foreign coercion has become more prevalent, and that an expeditious response by the EU is needed.

Member States individually lack sufficient leverage to oppose powerhouses like China, Russia and the United States, as acknowledged in the ACI’s preamble. Adopting a common, effective governance structure to decide on anti-coercion measures enables the EU to cooperate more effectively with other countries (like Japan and the US) in responding to widespread coercive economic statecraft (notably by China and Russia). Cooperation is in fact forcefully advocated by several institutions within the EU and the US as a preferred response to foreign economic coercion, making it more difficult for the coercing country to escalate pressures on the coerced countries individually.

Arguably, even when adopted, the ACI risks remaining a dead letter if and to the extent the EU in parallel does not overhaul the way it handles foreign policy. Decision-making in foreign policy might need to change from consensus to qualified majority voting (so there is no veto power for any one Member State); and policies towards powerful third countries need to be articulated in a more unified manner.

The ACI provides a new, comprehensive way for the EU and its Member States to combat economic coercion. Unsurprisingly, China has been critical of the ACI, as well as other recent additions to the EU’s trade toolbox. However, the ACI’s reliance on EU hegemony, the potential impacts on its economic and political ties with key actors, and the ACI’s place within EU and international law, can be expected to provide food for thought and stimulating discussions for many years to come.

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