Source: EURLEX
Language: en
Format: md

Summary results

Public consultation on an EU anti-coercion instrument

1.Introduction

The open public consultation as the central consultation activity for the EU anti-coercion initiative
[1](#footnote2)
 was open to all stakeholders and citizens and lasted for 12 weeks, starting on 23 March 2021 and closing on 15 June 2021. It was available via EUSurvey, in all EU official languages. The online questionnaire contained 32 questions, with the possibility for open remarks for each question and for submitting a position paper. The summary below presents the results of the consultation, starting with the respondents’ profile. The detailed results per question and per stakeholder group, and the respondents’ list are available here.

The summary results presented below cannot be regarded as the official position of the Commission and its services and thus do not bind the Commission.

2.Respondents’ Profile

48 contributions to the public consultation were recorded via EUSurvey with 12 position papers, whereas 12 additional contributions were received outside of EUSurvey.

The contributors to the responses were business associations (23), companies (7); EU citizens (6); public authorities (4); trade unions (2), NGOs (1) and academic/research institutions (1), others such as liberal professions (4). The geographical spread of the responses was wide, covering mainly the EU but also non-EU countries: Belgium (11), China (1), Czech Republic (1), Denmark (1), Estonia (1), France (12), Germany (9), Hungary (1), Italy (4), Malta (1), Nepal (1), Spain (1), Sweden (1), Switzerland (1) and Taiwan (1). The contributions made outside EUSurvey came by business associations (7) and public authorities (5), from Germany (2), France (2), Denmark (1), Belgium (5), Sweden (1) and Austria (1).

The following industries participated (in and outside of EUSurvey): aerospace and defence industries; textiles; footwear; semiconductors; automotive; food and drink manufacturing industry; alcohol; healthcare; optics, photonics, analytical and medicinal technologies; finance and banking; energy; telecommunications; ceramics; retailers; metals; agriculture (seeds and seedlings); technology in general; rail supply; as well as representations of industries at national or EU level or outside the EU (e.g. manufacturing, technology). The majority are export-oriented and operating internationally with global exposure. The size of the participating organisations was evenly divided. It is of note that the micro and small companies were predominantly represented by business associations.

3.Coercive practices by non-EU countries – problem definition under the initiative

Respondents generally agreed or partly agreed with the provisional definition for coercive practices (figure on question 1, source: EUSurvey results).

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Business associations and companies reacted broadly in favour of the definition (and the instrument). Those that agreed partially with the definition frequently suggested addressing coercion specifically against private economic operators and extra-territorial sanctions, because of the significant economic implications. Additionally, this group urged not to exclude diplomatic pressure, public pressure, targeted administrative measures or informal, more subtle coercion. Public authorities also generally agreed with the definition while pointing to the need to clarify the interplay between government and private coercive action, the coverage of non-trade/investment economic practices and the link to the market access strategy. Some suggested only targeting illegal forms of coercion. Others argued that any form of economic coercion must be covered without exceptions. Yet others raised the need to clarify the process of assessment of the intention of coercion, and how a certain policy decision of the EU or a Member State could be linked to intended coercion.

Various stakeholders referred to a number of examples of (potential) coercive measures involving China, Indonesia, Libya, Nigeria, Russia, Turkey, Tunisia, and the US (see detailed results here). Some of them were indicated as an imminent threat and some as a threat in the medium to long term. Stakeholders indicated that the timeline for adoption of coercive measures may be instant adoption or in 1-2 days, 10 days, a month, 3-6 months, or a year, depending on the third country.

As regards types of coercion, business associations indicated that these may include harshly enforced administrative rules in a much stricter and burdensome manner, deliberate delays, denials of licenses, extra-territorial measures, illegal expropriation, SPS regulations not scientifically justified, in highly regulated sectors, such as medical technology, new barriers to market entry, such as new (higher) local content requirements in public tenders or longer processing times for foreign manufacturers for product authorisations; China’s boycotting of products from individual EU countries (e.g. to stifle criticism). They also distinguished between coercion at state-to-state level and coercion at state-to-company level. Public bodies referred to indirect and direct forms of coercion.

Stakeholders observed that the following areas or sectors could be affected most if a particular non-EU country uses coercion: energy, (new) technology, ICT area, raw materials, financial sector and (critical) infrastructure, R&D, transport, equipment, seeds, ceramics, tiles, furniture, IT/digital industries, textile, footwear, agri-foods, manufacturing, aerospace and defence, chemical, health, retail, product registration, participation in public tenders, public procurement sectors in general as linked to public authorities, import bans, technical regulations and cooperation with authorities in third countries. The services sector can be particularly exposed to coercive pressure when it is subject to authorisations or concessions.

As regards possible drivers of coercive practices, all stakeholder groups gave predominantly an affirmative answer to each suggestion in the consultation, namely: efforts to avoid political, economic or other effects of actions by the targeted state; efforts to prevent a targeted state from regulation; imposing one’s own or other model abroad; imposing the commercial interests of the coercing country’s companies abroad; efforts to limit the conduct of other countries’ economic operators somewhere in the world.

As regards the consequences for the EU or Member States as a target of coercive practices by non-EU countries, there are also similar results among the groups. Stakeholders agreed or strongly agreed that coercive practices weaken the EU’s open strategic autonomy and undermine the freedom of action for the EU or its Member States to regulate within their own jurisdictions. Stakeholders agreed or strongly agreed that coercion would also lead to a loss of jobs and business (opportunities) or investment (opportunities) abroad as well as other economic costs, which distort competition. They reported the following particular negative effects and costs arising from coercion:

-impeded business growth and development;

-difficulties with diversification of trade flows and distortion of global value chains;

-increased direct costs, loss of revenue, increased administrative burdens;

-costs of detaining the goods stranded under customs control in ports or even the costs of returning the goods or destroying them, which vary depending on the quantities and number of days blocked (from EUR 5 K to more than one million, etc.);

-longer times for processing product registrations and importation in the third country concerned, loss of market access, cancellation of client orders, loss of reputation in the third country (difficult to quantify and depends on the individual case of the company concerned);

-even temporary coercive acts can influence the purchasing behaviour of local consumers significantly; imposing import barriers may develop a form of consumer patriotism that will direct purchases towards local products;

-threats of coercive practices give rise to serious concerns and uncertainties among exporters, destabilising their business strategy even before coercive practices are introduced; threats are sufficient to break trade contracts with importers;

-many companies and even sectors experienced coercive conduct by third country governments but will not speak openly about specific experiences, especially because of an ongoing fear of retaliation or further coercive behaviour;

-rise of illicit trade facilitated by coercive import restrictions.

Business associations noted in their further comments that the damage from coercion can only be partly quantified at best. Further comments included the observation that the coercive measures are particularly designed to have impact swiftly or in a very short period.

4.Policy intervention in the form of an EU anti-coercion instrument and design options

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No respondent rejected the need for an EU policy instrument to tackle coercive practices by non-EU countries. There were only affirmative replies or neutral/no answer (figure on question 15, source: EUSurvey results).

In particular, business associations agreed or strongly agreed, some added that today’s geopolitical and trade context required an instrument. Public bodies were neutral to supportive. The following remarks were made:

-a sound factual analysis is needed prior to determining the need for an additional legal instrument;

-the need, in the use of the instrument, for assessment of the impact of any coercive measures and the potential impact of any countermeasures, which are to be deployed only as last report, as well as a thorough assessment of the EU’s interest in counteraction;

-in order to avoid cumulative negative effects on relations with the EU’s trading partners and wider EU trade openness and to preserve the transparency, consistency and legitimacy of the EU’s trade policy, the instrument must be accompanied by a thorough impact analysis, including the importance of carefully analysing the interaction of the proposed instrument’s measures with other trade defence initiatives;

-the deterrence value the instrument must have;

-if used as last resort, it must be impactful enough to solve problems quickly, with a minimum of collateral damages for economic operators;

-its use should not create or fuel escalation with trading partners.

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Furthermore, the majority of the respondents across the groups qualified the need for an instrument as pressing (figure on question 16, source: EUSurvey results). Specific justifications for the pressing need included preserving urgently the EU credibility on the international stage and to encompass a long-term vision; in light of the current crisis and the growing tendency towards “weaponisation” of trade over the last five years; given the geopolitical tensions between China and the United States and the stalemate in WTO dispute settlement.

As regards possible general objectives of an EU policy instrument, all stakeholder groups broadly supported the options of deterrence (discouraging the non-EU country from using coercion), inducing the non-EU country to discontinue the coercion, imposing an economic cost on the coercing non-EU country through countermeasures, enhancing the EU’s open strategic autonomy and safeguarding the EU interests. A NGO commented that the EU policy framework should support international cooperation, multilateralism and the rules-based order. It was further argued by some that it is important that the EU equip itself with the necessary tools to respond expeditiously and effectively to coercive practices and defend its interests, but the aim has to be keeping the world open for trade as much as possible rather than building another wall to enclose Europe behind. Protectionism must be avoided.

As regards circumstances for the use of the instrument, the majority of respondents supported the option of using the instrument to impose countermeasures only after an attempt for a negotiated/diplomatic solution and after giving the non-EU country a period to withdraw its coercive measures, and in case the coercion is in breach of international law. The answers were rather mixed between the stakeholders groups about applying countermeasures only as last resort but the majority of further comments emphasised the importance of countermeasures only as last resort (mainly business associations and to avoid disproportionate burden on businesses). In their further remarks, most respondents stated that the instrument’s use must not harm the EU’s legitimacy as a trading partner by triggering an unwanted escalation of trade conflicts and harming the commercial interests of businesses and consumers. Hence, the instrument should be used in complementarity with diplomatic efforts and should not override the scope of other existing EU instruments. One company expressed doubts on whether attempts at reaching diplomatic solutions would be successful in breaking patterns of coercive behaviour. Another cautioned against efforts to reach a diplomatic solution delaying the procedure under the instrument. Many argued that the trigger for the instrument must be broad to cover a non-exhaustive list of situations. Alternatively, others argued that the instrument should be applied only in exceptional cases. A business association suggested that given the close trade relationships between the EU and EFTA members, those countries should be excluded from the scope of the instrument, and more broadly, all countries with which the EU has free trade agreements.

For public authorities, it is important that the instrument is coherent with any diplomatic processes. Furthermore, the instrument should not be used when the possible negative consequences of EU countermeasures outweigh the impacts of possible further escalation of the situation (possibility to use an EU interest test). Exceptionally, sensitive cases should be approached on case-by-case basis. Public authorities also shared in their remarks that a good balance between swiftly addressing coercive practices and curbing escalation of coercive practices should be struck by developing an objective framework for the application of the instrument. Another public authority suggested a careful assessment of the effectiveness of countermeasures and possible implications (potential spiral of trade tensions, which could endanger the rules-based trading order and harm the EU economy) before adopting them.

Some stakeholders believed that the Council should determine the legitimacy of use because the instrument is likely to produce foreign policy effects despite its commercial nature.

Additionally, respondents invariably commented positively on the statement that any EU policy intervention, such as the discussed new instrument, must be compatible with EU and international law. Across the groups, stakeholders underlined the need for ensuring compliance with EU’s international commitments and obligations, and to not undermine the efforts to reform the WTO.

As regards a possible threshold for use of the instrument, e.g. only if the seriousness of the coercion surpasses a certain level, respondents were divided between those who see the need for a threshold (20%), and those who do not see the need for a threshold (25%), while the rest were neutral or did not respond to this question. Those who see the need expressed a preference for a more flexible, case-by-case approach, based on qualitative measurements (fundamental democratic values, significant effect on sectors, economic impact, vital interests, and the like). Those that did not favour a threshold had the following remarks: a threshold limits the use and this can be counterproductive for the instrument’s usefulness, timeliness and or/effectiveness; if only numerical economic impact is considered, only large countries/markets could be targeted, with smaller ones getting the message that they can proceed without fear of retaliation; a threshold could not adequately cover the situation that can significantly change from one economic sector to another.

As regards EU’s alternatives to an anti-coercion instrument to tackle coercive practices, business associations recognised that an EU policy instrument is not an universal solution to coercive practices (but maintained it was necessary), and that the EU can take other important steps in that direction by increasing its economic and (security) political power and independence and by developing a certain degree of strength in strategic sectors. They referred to diplomacy as well, the revision of the Blocking Statute, support measures such as export credits or financial support to companies affected by coercive measures by third countries. Public authorities commented that, in the absence of the instrument, the EU would fall back on existing diplomatic/political processes and instruments already available. More specifically, they pointed to: the Enforcement Regulation, IPI regulation (currently in the legislative process), trade defence instruments, FDI screening tool, the Blocking Statute, CFSP measures by the Council, recourse to the WTO dispute settlement mechanism.

Others suggested alternative avenues such as: strengthening the resources allocated to intelligence and economic intelligence; establishing cooperation between the Member States, the EU and businesses; improving and promoting support for businesses in managing this risk, in particular by means of awareness-raising and training measures to prevent risks from materialising; promoting multilateralism; promoting the involvement of lawyers in all companies irrespective of their size.

Most respondents either agreed or strongly agreed that the types of countermeasures of the EU Trade Enforcement Regulation (regarding goods, services, intellectual property and public procurement) would be appropriate and effective in an anti-coercion instrument, as well as that additional countermeasures should feature as well (investment and more regarding goods, intellectual property and public procurement or other trade measures). See the two figures below, source: EUSurvey results.

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Those in favour of all options underlined that a wide array of countermeasures would be important for a flexible, adaptable, swift and effective response to coercive practices, and would allow limiting any collateral negative effects for EU businesses and consumers. A business association urged that countermeasures should not focus exclusively on trade in goods (goods have continuously been taken hostage of trade disputes in the past years, bearing a disproportionate burden with the affected products often being unrelated to the goods subject to the disputes). Furthermore, restrictions on trade related aspects of intellectual property rights should be handled carefully, with the need to avoid countermeasures on EU geographical indications. As a rule, it was argued that the EU should refrain from targeting sectors in which it has a trade surplus.

Public authorities noted that the EU should prioritise countermeasures that cannot be challenged in any of the established dispute settlement systems. They expressed concerns regarding the efficiency of countermeasures relating to trade in services as the EU is one of the largest beneficiaries of free trade in services.

Respondents across the stakeholder groups broadly agreed that an EU anti-coercion instrument should provide for clear, objective criteria for designing and applying countermeasures, such as proportionality, capability to induce compliance by the coercing country, as small as possible collateral damage and administrative burden by countermeasures, temporary nature of countermeasures, being in the EU general interest. The majority remained neutral regarding the type of countermeasure being linked to the type of coercion and neutral about reacting in the same sector as the coercion.

The majority of the respondents generally supported the statement that a swift imposition of countermeasures is important for protecting the interests at stake, asserting the EU’s international rights and protecting its autonomy firmly and effectively. Business associations elaborated that speed is important for the credibility and deterrence effect. Public authorities clarified that swiftness should not be at the expense of proper argumentation and justification or proper analyses of the political consequences and the impact on the EU and Member States.

Respondents were invariably in favour of the Commission consulting relevant stakeholders on their respective interests before taking countermeasures and suggested various durations of consultation period (from several days to several months), including the possibility for private and public hearings.

Stakeholders were split on the question of compensation to EU businesses for the damage suffered due to the coercion and due to the EU countermeasures, with around half agreeing, and the others disagreeing or being neutral or giving no answer. Business associations and companies generally agreed, while the other groups had mixed answers. The benefits were linked to combating loss of markets and hence jobs, short-term relief, reassurance and support to companies who are otherwise being encouraged by the EU and Member States to seize the opportunities offered by international trade. On the other hand, challenges were identified in relation to complexity of managing such an instrument, calculating the compensation, budgetary implications. Some pointed out that compensation should not become a substitute for the EU’s and Member States’ continued efforts to restore stable trade and political relations with third countries concerned.

5.Likely impact of an EU anti-coercion instrument and of a non-intervention

As regards expected benefits of an EU anti-coercion instrument (its existence or use), the majority of respondents considered the following benefits likely or very likely: an important dissuasive effect towards third countries, a major role in inducing discontinuation of coercion, a rebalancing effect in international relations, protecting the EU economic interests, preserving the legitimate policymaking space of the EU and Member States, projecting the EU as a credible geopolitical actor, increasing the EU’s and Member States’ resilience, preserving and promoting international trade, overall effectiveness, enhancing the EU’s open strategic autonomy. The majority also agreed that an instrument should not exclude the (simultaneous) use of diplomatic means, which many respondents attach a great value to, and that the deterrence effect should be of great importance. Public authorities added that the priority should be strengthening the rules-based order.

As regards costs and negative impact of an EU anti-coercion instrument, the majority found the following likely or very likely: risking harm to political and economic relations with non-EU countries, a risk of escalation and retaliation, direct costs for businesses and consumers if countermeasures are applied, administrative burden in relation to implementation of countermeasures. Business associations representing small businesses added that the latter may be affected disproportionately either by adding administrative burdens to them or by stifling their business, especially if their trading flows depend on the countries the instrument is acting against. For all these reasons, it was argued that impact should be taken into account in the creation and application of the instrument. It was observed that it was difficult to estimate costs in advance and to assess such costs independently from the nature or form of the coercion at issue; costs would depend on specific factors such as the measure taken, the relations between the EU and the coercing country and on the potential ways to balance the measure or its effects. Generally, there were mixed follow up remarks also. A business association argued that by resorting to coercion, the coercing country ‘took the first step’ in harming political and economic relations, and the EU in responding could not be held responsible for escalation. A public authority observed that the EU already had tools to protect its interests and that a unilateral anti-coercion instrument could cause negative impacts by undermining the multilateral trading system and escalating protectionism. Some respondents questioned the potential effectiveness of the instrument (mixed answers). On the other hand, most business associations that participated strongly rejected concerns that the instrument cannot effectively address coercion and the majority across the groups rejected the suggestion that the instrument is not needed due to the existence of other means (and instruments) to tackle coercion. Other stakeholders noted that the cost of non-intervention could be more damaging for the EU and its economic operators in the long term than a policy intervention.

As regards further impacts like social, environmental, fundamental rights, administrative simplification or burden, business associations noted that because countermeasures are eclectic, all areas might be affected, either directly or indirectly. It was also observed that a robust anti-coercion instrument would have important impacts on the international scene by discouraging third countries from adopting coercive measures and this, in turn, could result in the EU being able to have more weight when setting ambitious international social and environmental standards.

Public authorities were concerned that the use of the anti-coercion instrument could have a negative impact on EU businesses, including uncertainty in doing businesses, additional costs in long-term contracts, enhanced administrative burdens in complying with new rules, compromised conditions of cooperation or impacting on the right of doing business. Member States could also suffer from the burden that countermeasures entail. If the instrument only acts as an effective deterrent, however, it would have positive impacts for the EU. It was also noted that the instrument could have far reaching and long-term impacts on the EU’s trade policy and the global rules-based trading system.

According to respondents a non-intervention scenario (i.e. if the EU does not proceed with a policy intervention at this stage) may result in benefits such as avoiding the risk of negative impact on relations with third countries but the majority pointed to a number of costs and negative consequences such as impaired autonomy for decision-making in the EU, EU values not being defended sufficiently, more coercive measures as a result of the failure to deter, various costs for businesses and consumers (including long-term and going beyond commercial costs, with impact on SMEs), reduced competitiveness. Additionally, some argued that a non-intervention would lead to a loss of EU credibility or a weakening of the EU’s position on the international scene. It was also observed that it could result in diminished geopolitical influence by the EU in the setting of international social and environmental standards.

6.Articulation with other initiatives

As regards the articulation between the anti-coercion initiative and future EU initiatives countering the extra-territorial application of non-EU countries’ sanctions, stakeholders’ suggestions ranged from keeping the instruments separate, to the instruments being complementary in addressing extra-territorial sanctions, to one instrument taking over the other instrument. Generally, business associations considered it important that both instruments are complementary to address effectively extra-territorial sanctions, while some public authorities agreed and others had opposite views.

:   [(1)](#footnoteref2)
     
       The other consultation activities included a stakeholder meeting and targeted consultations throughout the period March-June 2021. The consultation strategy is available 
    <here>
    .

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