Source: EURLEX
Language: en
Format: md

**EUROPEAN UNION**

**THE EUROPEAN PARLIAMENT** **THE COUNCIL**

**Strasbourg, 22 November 2023**
**(OR. en)**

**2021/0406 (COD)**
**LEX 2269**

**PE-CONS 34/1/23**

**REV 1**

**POLCOM 124**

**COMER 78**

**IA 151**

**CODEC 1136**

**REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL**

**ON THE PROTECTION OF THE UNION AND ITS MEMBER STATES**

**FROM ECONOMIC COERCION BY THIRD COUNTRIES**

PE-CONS 34/1/23 REV 1

# **EN**

**REGULATION (EU) 2023/…**

**OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL**

**of 22 November 2023**

**on the protection of the Union and its Member States**

**from economic coercion by third countries**

**(Text with EEA relevance)**

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular

Article 207(2) thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Acting in accordance with the ordinary legislative procedure **[1]**,

**1** Position of the European Parliament of 3 October 2023 (not yet published in the _Official_
_Journal of the European Union_ ) and decision of the Council of 23 October 2023.

PE-CONS 34/1/23 REV 1 1

# **EN**

Whereas:

(1) Pursuant to Article 3(5) of the Treaty on European Union (TEU), in its relations with the

wider world, the Union is to uphold and promote its values and interests and contribute to

the protection of its citizens and is to contribute, among other things, to solidarity and

mutual respect among peoples and the strict observance and the development of

international law, including respect for the principles of the United Nations Charter

(the ‘UN Charter’).

(2) Pursuant to Article 21(1), first subparagraph, TEU, the Union's action on the international

scene is to be guided by principles such as the rule of law, equality and solidarity, and

respect for the principles of the UN Charter and international law. Pursuant to

Article 21(1), second subparagraph, TEU, the Union is also to promote multilateral

solutions to common problems.

(3) Pursuant to Articles 1 and 2 of the UN Charter, one of the purposes of the United Nations

is to develop friendly relations among nations in accordance with, among others, the

principle of sovereign equality.

(4) Article 21(2) TEU requires the Union to define and pursue common policies and actions,

and to work for a high degree of cooperation in all fields of international relations in order

to, among other things, safeguard its values, fundamental interests, independence and

integrity, consolidate and support the rule of law, and the principles of international law.

PE-CONS 34/1/23 REV 1 2

# **EN**

(5) The Declaration on Principles of International Law concerning Friendly Relations and Co

operation among States in accordance with the Charter of the United Nations, adopted by

the General Assembly of the United Nations on 24 October 1970, states that international

relations are to be conducted in accordance with the principles of sovereign equality and

non-intervention. That Declaration also provides, in relation to the principle concerning the

duty not to intervene in matters within the domestic jurisdiction of any State, 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 and is thus binding in the relations between third countries, on the one

part, and the Union and its Member States, on the other. Moreover, rules of customary

international law on State responsibility for internationally wrongful acts are reflected in

the Articles on the Responsibility of States for Internationally Wrongful Acts (ARSIWA),

adopted in 2001 by the United Nations’ International Law Commission at its fifty-third

session, and taken note of by the United Nations General Assembly in Resolution 56/83.

Those rules are binding in the relations between third countries, on the one part, and the

Union and its Member States, on the other.

(6) The modern interconnected world economy increases the risk of economic coercion, as it

provides countries with enhanced means for such coercion, including hybrid means. It is

desirable that the Union contribute to the creation, development and clarification of

international frameworks for the prevention and elimination of situations of economic

coercion.

PE-CONS 34/1/23 REV 1 3

# **EN**

(7) Whilst always acting within the framework of international law, it is essential that the

Union possess an appropriate instrument to deter and counteract economic coercion by

third countries in order to safeguard its rights and interests and those of its Member States.

This is particularly the case where third countries interfere in the legitimate sovereign

choices of the Union or a Member State by applying or threatening to apply measures

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, including an expression of a

position by an institution, body, office or agency of the Union or a Member State. Such

measures affecting trade or investment include not only actions taken on, and having

effects within, the territory of the third country concerned, but also actions taken by the

third country, including through entities controlled or directed by the third country and that

are present in the Union, that cause harm to economic activities in the Union. The term

‘third country’ should be understood to include not only a third State, but also a separate

customs territory or other subject of international law because such entities are also

capable of economic coercion. The use of that term and the application of this Regulation

do not have any implication regarding sovereignty. Moreover, this Regulation should be

applied in conformity with the Union’s position in relation to the third country concerned.

PE-CONS 34/1/23 REV 1 4

# **EN**

(8) This Regulation aims to ensure an effective, efficient and swift Union response to

economic coercion. It especially aims to deter the economic coercion of the Union or a

Member State and to enable the Union, as a last resort, to counteract economic coercion

through Union response measures. This Regulation is without prejudice to existing Union

instruments and to international agreements concluded by the Union, as well as to actions

taken thereunder that are consistent with international law, in the area of the common

commercial policy, and to other Union policies.

(9) Economic coercion by third countries can target foreign policy actions of the Union or a

Member State and a determination of the existence of economic coercion, and the

responses thereto, can have significant implications for relations with third countries. It is

necessary to ensure consistent responses in distinct but related policy areas. This

Regulation is without prejudice to a possible Union action pursuant to specific provisions

in Chapter 2 of Title V of TEU, to which due consideration should be given when

considering any response to economic coercion by a third country.

PE-CONS 34/1/23 REV 1 5

# **EN**

(10) The economic coercion of a Member State by a third country affects the Union’s internal

market and the Union as a whole. Member States, acting on their own, cannot counteract

economic coercion by third countries through measures falling within the area of common

commercial policy. Given the exclusive competence conferred on the Union by Article 207

of the Treaty on the Functioning of the European Union (TFEU), only the Union is

permitted to act. Moreover, it is possible that Member States, as distinct actors under

international law, are not entitled to counteract economic coercion of the Union by third

countries. Therefore, it is necessary that the means for effectively achieving those

objectives are created at Union level. This Regulation is without prejudice to the division

of competences between the Union and its Member States.

PE-CONS 34/1/23 REV 1 6

# **EN**

(11) In accordance with the principle of proportionality, it is necessary and appropriate, for

creating an effective and comprehensive framework for Union action against economic

coercion, to lay down rules on the examination, determination and counteraction with

regard to economic coercion by third countries. The Union response measures should be

preceded by an examination of the facts, a determination of the existence of economic

coercion, and, wherever possible and provided that the third country also engages in good

faith, efforts to find a solution in cooperation with the third country concerned. Any

measures imposed by the Union should be proportionate and not exceed the injury to the

Union. The criteria for selecting and designing the Union response measures should take

into account, in particular, the effectiveness of the Union response measures in inducing

the cessation of the economic coercion and, where requested, reparation of the injury to the

Union, and the need to avoid or minimise collateral effects, disproportionate administrative

complexity and burdens and costs imposed, in particular, on Union economic operators, as

well as the Union interest. Therefore, this Regulation does not go beyond what is necessary

in order to achieve the objectives pursued, in accordance with Article 5(4) TEU.

(12) Any action undertaken by the Union on the basis of this Regulation should be consistent

with international law, including customary international law. Among the international

agreements concluded by the Union and the Member States, the Agreement establishing

the World Trade Organization (WTO) is the cornerstone of the rules-based multilateral

trading system. Therefore, it is important that the Union continue to support that system,

with the WTO at its core, and to use its dispute settlement system where appropriate.

PE-CONS 34/1/23 REV 1 7

# **EN**

(13) Customary international law, as reflected in Article 22 and Articles 49 to 53 of the

ARSIWA, allows, under certain conditions such as proportionality and prior notice, the

imposition of countermeasures, namely measures that would otherwise be contrary to the

international obligations of an injured party vis-à-vis the country responsible for a breach

of international law, and that are aimed at obtaining the cessation of the breach or

reparation for it. Accordingly, Union response measures could consist, as necessary, not

                                                           only in measures consistent with the Union’s international obligations, but also in the non

performance of international obligations towards the third country concerned insofar as the

economic coercion by the third country constitutes an internationally wrongful act. Under

international law, in accordance with the principle of proportionality, countermeasures are

to be commensurate with the injury suffered, taking into account the gravity of the

internationally wrongful act and the rights in question. In that respect, injury to the Union

or a Member State is understood under international law to include injury to Union

economic operators.

PE-CONS 34/1/23 REV 1 8

# **EN**

(14) Where the economic coercion constitutes an internationally wrongful act, the Union

should, where appropriate, in addition to the cessation of economic coercion, request the

third country concerned to make reparation for any injury to the Union, in accordance with

Article 31 and Articles 34 to 39 of the ARSIWA. In the event of the Union obtaining

compensation for the injury to Union operators, the Union may, where appropriate and to

the extent possible, consider transferring that compensation to the Union operators that

have suffered loss as a result of the economic coercion.

PE-CONS 34/1/23 REV 1 9

# **EN**

(15) Coercion is prohibited and therefore a wrongful act under international law when a country

deploys measures such as trade or investment restrictions in order to obtain from another

country an action or inaction which that country is not obliged to perform under

international law and which falls within its sovereignty, and when the coercion reaches a

certain qualitative or quantitative threshold, depending both on the objectives pursued and

the means used. The Commission and the Council should take into account qualitative and

quantitative criteria that help in determining whether the third country interferes in the

legitimate sovereign choices of the Union or a Member State and whether its action

constitutes economic coercion which requires a Union response. Among those criteria,

there should be elements that characterise, both qualitatively and quantitatively, notably

the form, the effects and the aim of the measures which the third country is deploying.

Applying those criteria would ensure that only economic coercion with a sufficiently

serious impact or, where the economic coercion consists in a threat, that only a credible

threat, falls under this Regulation. In addition, the Commission and the Council should

examine closely whether the third country pursues a legitimate cause, because its objective

is to uphold a concern that is internationally recognised, such as, among other things, the

maintenance of international peace and security, the protection of human rights, the

protection of the environment, or the fight against climate change.

PE-CONS 34/1/23 REV 1 10

# **EN**

(16) Acts by third countries are understood under customary international law to include all

forms of action or omission, including threats, that are attributable to a State under

customary international law. Article 2(a) and Articles 4 to 11 of the ARSIWA confirm that

customary international law qualifies as an act of a State, in particular: the conduct of any

State organ, of a person or entity which is not an organ of the State but which is

empowered by the law of that State to exercise elements of governmental authority; the

conduct of an organ placed at the disposal of a State by another State; the conduct of a

person or group of persons that are acting on the instructions of, or under the direction or

control of, that State in carrying out the conduct; the conduct of a person or group of

persons that are exercising elements of the governmental authority in the absence or

default of the official authorities and in circumstances such as to call for the exercise of

those elements of authority; and the conduct that the State acknowledges and adopts as its

own.

(17) The Commission should examine whether a third-country measure constitutes economic

coercion. The Commission should carry out such an examination on the basis of

information received from any reliable source, including natural and legal persons, the

European Parliament, a Member State or trade unions. In order to determine whether a

third country applies or threatens to apply measures affecting trade or investment which

constitute economic coercion, the assessment of the Commission and the Council should

be based on facts.

PE-CONS 34/1/23 REV 1 11

# **EN**

(18) In order to ensure uniform conditions for the implementation of this Regulation, and in

view of the unique nature of economic coercion affecting trade and investment,

implementing powers should be conferred on the Council for the determination of the

economic coercion and whether it is appropriate to request reparation for the injury to the

Union. Conferring implementing powers on the Council is limited to, and addresses, the

circumstances arising from the economic coercion and is not to be considered as a

precedent.

PE-CONS 34/1/23 REV 1 12

# **EN**

                                                            (19) Following the Commission’s examination, where the Commission concludes that the third

country measure constitutes economic coercion, the Commission should submit a proposal

to the Council for an implementing act determining that the third-country measure meets

the conditions for the existence of economic coercion. In that proposal, the Commission

should include an indicative period for the Commission to assess whether the conditions

for the adoption of Union response measures are met. Where appropriate, the Commission

should also submit a proposal for a Council implementing act determining that the Union

requests the third country to repair the injury to the Union. Furthermore, economic

coercion can have an impact on the Union or any Member State and thus create a need to

act swiftly under this Regulation and in line with the Union principles of solidarity

between Member States and of sincere co-operation. As a consequence, the Council should

act expeditiously and make all necessary efforts to adopt a decision within 8 weeks of the

submission of the proposal by the Commission. In the exercise of its implementing powers,

the Council should act in accordance with the conditions for the existence of economic

coercion and criteria for determining whether it is appropriate to request the third country

to repair the injury to the Union.

PE-CONS 34/1/23 REV 1 13

# **EN**

(20) In an effort to secure the cessation of economic coercion and, where requested, reparation

of injury to the Union, the Union should seek an early and just settlement of the matter.

Accordingly, the Commission should provide adequate opportunity for consultations with

the third country concerned and, if that third country is ready to enter into consultations in

good faith, engage with it expeditiously. In the course of such consultations, the

Commission should endeavour to explore means such as direct negotiations, submitting the

matter to international adjudication, or mediation, conciliation or good offices by a third

party, without prejudice to the division of competence between the Union and the Member

States. In particular, when the third country suspends the economic coercion and agrees to

submit the matter to international adjudication, an international agreement with the third

country should be concluded, as necessary. Such an international agreement could be

concluded either by the Union, in accordance with Article 218 TFEU, or by the Member

State concerned.

(21) The Union should support and cooperate with third countries affected by the same or

similar economic coercion or other interested third countries. The Union should participate

in international coordination in any bilateral, plurilateral or multilateral fora that are

suitable for the prevention or elimination of economic coercion. The Commission should

express the Union position after having consulted the Council in accordance with the

Treaties as applicable and, where appropriate, with the participation of the Member States.

PE-CONS 34/1/23 REV 1 14

# **EN**

(22) It is desirable that the Union proactively use all available means of engagement with the

third country concerned such as negotiations, adjudication or mediation, and that it only

impose response measures where such means do not lead to the prompt and effective

cessation of the economic coercion and, where appropriate and requested by the Union

from the third country concerned, the reparation of the injury to the Union, and where

action is necessary to protect the interests and rights of the Union and its Member States

under international law and it is in the Union interest to take such action. It is appropriate

that this Regulation sets out the applicable rules and procedures for the imposition and

application of Union response measures and permits expeditious action where necessary to

preserve the effectiveness of those Union response measures.

PE-CONS 34/1/23 REV 1 15

# **EN**

(23) Union response measures adopted in accordance with this Regulation should be selected

and designed on the basis of objective criteria, including: the effectiveness of the measures

in inducing the cessation of the economic coercion and, where appropriate, the reparation

of the injury it has caused to the Union; the potential to provide relief to Union economic

operators affected by the economic coercion; the aim of avoiding or minimising negative

economic and other effects on the Union; and the avoidance of disproportionate

administrative burden and costs in the application of the Union response measures. The

investment environment and knowledge economy of the Union should be safeguarded. It is

essential that the selection and design of Union response measures take account of the

Union interest, which includes, among other things, the interests of both Union upstream

and downstream industries and Union final consumers. When the Commission is

considering Union response measures, it should give preference to measures that would not

have a disproportionate impact on legal certainty and predictability of the measures for

economic operators, and on the administration of relevant national regulations. When the

Commission is considering Union response measures affecting authorisations,

registrations, licenses or other rights for the purposes of commercial activities, it should

give preference to measures which affect procedures applied on a Union-wide basis and

based on secondary legislation, or, where no such measures are appropriate, measures in

areas where extensive Union law exists. Union response measures should not interfere with

administrative decisions that are based on the evaluation of scientific evidence. Union

response measures should be selected from a wide array of options in order to allow the

adoption of the most suitable measures in any given case.

PE-CONS 34/1/23 REV 1 16

# **EN**

(24) The Union should be able to adopt Union response measures of general application

designed in such a way that they affect particular sectors, regions or operators of the third

country concerned. The Union should also be able to adopt Union response measures

which apply to certain natural or legal persons that are connected or linked to the

government of the third country and that engage or may engage in activities covered by

Article 207 TFEU. Such targeted Union response measures can induce the prompt

cessation of economic coercion, whilst effectively avoiding or minimising the negative

effects of such coercion on Member States’ economies, Union economic operators and

Union final consumers.

PE-CONS 34/1/23 REV 1 17

# **EN**

(25) As part of the Union response in order to induce the cessation of economic coercion by

third countries, the Commission can also adopt measures pursuant to legal instruments

other than this Regulation that confer specific powers to the Commission, for example with

regard to the granting of Union funding or possibilities to limit participation in Union

framework programmes for research and innovation, in accordance with the procedures set

out therein. This Regulation is without prejudice to rules and procedures under such other

legal instruments. The Commission should ensure coordination of the adoption of

measures set out in Annex I with the measures it adopts pursuant to Union legal acts other

than this Regulation. In particular, the Union’s overall response should be proportionate

and not exceed the level of injury to the Union. Without prejudice to any reporting

obligations towards the European Parliament or the Council provided for under such other

legal instruments, the Commission should keep the European Parliament and the Council

informed of actions under such instruments synchronised with Union response measures.

(26) It is appropriate to set out rules on the origin of goods or services and on the nationality of

service providers, investment and holders of intellectual property rights, for the purposes of

determining the Union response measures. The rules of origin and of nationality should be

determined in the light of the prevailing rules for non-preferential trade and investment that

are applicable under Union law and international agreements concluded by the Union.

PE-CONS 34/1/23 REV 1 18

# **EN**

(27) For the purposes of obtaining the cessation of the economic coercion in a particular case

and, where appropriate, the reparation of the injury caused, Union response measures

consisting of restrictions on foreign direct investment or on trade in services should only

apply with regard to services supplied, or direct investments made, within the Union by

one or more legal persons established in the Union and which are owned or controlled by

persons of the third country concerned, where necessary to ensure the effectiveness of

Union response measures and, in particular, to prevent their avoidance and circumvention.

The decision to impose any such restrictions should be duly justified in implementing acts

adopted pursuant to this Regulation in the light of the criteria specified in this Regulation.

(28) After the adoption of Union response measures, the Commission should continually assess

the situation of economic coercion, the effectiveness of the Union response measures and

their effects on the Union interest, with a view to amending, suspending or terminating the

Union response measures accordingly. It is therefore necessary to set out the rules and

procedures for amending, suspending and terminating Union response measures and the

circumstances in which the amendment, suspension or termination of Union response

measures is appropriate.

(29) It is essential to provide for opportunities for the involvement of stakeholders, including

businesses, for the purposes of the adoption and amendment of Union response measures

and, where relevant, for the purposes of their suspension and termination, in view of the

potential impact on such stakeholders.

PE-CONS 34/1/23 REV 1 19

# **EN**

(30) In light of economic coercion by third countries and, in particular, its frequency and

severity, the Commission should, to ensure coherence with any relevant Union legal acts,

provide a single point of contact for the functioning of this Regulation and, consequently,

should act with a view to ensuring that the Union is able to better anticipate and effectively

respond to economic coercion.

(31) It is important to ensure that the European Parliament and the Council are informed

regularly and in a timely manner of relevant developments in the application of this

Regulation and, where appropriate, have opportunities to exchange views with the

Commission.

PE-CONS 34/1/23 REV 1 20

# **EN**

(32) In order to allow the adjustment of the rules of origin or nationality to take account of

relevant developments in international instruments and experience in the application of

measures under this Regulation or other Union acts, the power to adopt acts in accordance

with Article 290 TFEU should be delegated to the Commission in respect of amending

Annex II. It is of particular importance that the Commission carry out appropriate

consultations during its preparatory work, including at expert level, and that those

consultations be conducted in accordance with the principles laid down in the

Interinstitutional Agreement of 13 April 2016 on Better Law-Making **[1]** . In particular, to

ensure equal participation in the preparation of delegated acts, the European Parliament

and the Council receive all documents at the same time as Member States' experts, and

their experts systematically have access to meetings of Commission expert groups dealing

with the preparation of delegated acts.

(33) In order to ensure uniform conditions for the implementation of Union response measures

under this Regulation, implementing powers should be conferred on the Commission.

Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the

European Parliament and of the Council **[2]** .

**1** OJ L 123, 12.5.2016, p. 1.
**2** Regulation (EU) No 182/2011 of the European Parliament and of the Council
of 16 February 2011 laying down the rules and general principles concerning mechanisms
for control by the Member States of the Commission's exercise of implementing powers
(OJ L 55, 28.2.2011, p. 13).

PE-CONS 34/1/23 REV 1 21

# **EN**

(34) The examination procedure should be used for the adoption of Union response measures

and their amendment, suspension or termination, given that those measures determine the

Union’s response to economic coercion falling within the scope of this Regulation.

Considering the specific nature of this Regulation and the particular sensitivity attached to

the Union response measures, the Commission should not adopt a draft implementing act

on any Union response measures where the Committee delivers no opinion on that act. In

exercising its implementing powers, special attention should be given by the Commission

to solutions which command the widest possible support among Member States and, at all

stages of the procedure, including in the appeal committee, to finding balanced solutions

and avoiding going against any predominant position amongst Member States, in particular

as regards the appropriateness of a draft implementing act.

(35) The Commission should adopt immediately applicable implementing acts of limited

duration where, in duly justified cases relating to the amendment or suspension of Union

response measures, imperative grounds of urgency require expedited action to avoid

irreparable damage to the Union or a Member State or to ensure consistency with

international law. Such expedited action could prevent the economic coercion from causing

or worsening any economic damage, in particular with a view to protecting acute and vital

interests of the Union or a Member State.

PE-CONS 34/1/23 REV 1 22

# **EN**

(36) Any action taken under this Regulation, including the adoption of Union response

measures which apply to certain natural or legal persons, is to respect the Charter of

Fundamental Rights of the European Union. Moreover, any processing of personal data

pursuant to this Regulation is to comply with applicable rules on the protection of personal

data. The processing of personal data by Member State officials obtaining information

under this Regulation is to be carried out in accordance with Regulation (EU) 2016/679 of

the European Parliament and of the Council **[1]** . The processing of personal data by the Union

institutions is to be carried out in accordance with Regulation (EU) 2018/1725 of the

European Parliament and of the Council **[2]** .

**1** Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016
on the protection of natural persons with regard to the processing of personal data and on the
free movement of such data, and repealing Directive 95/46/EC (General Data Protection
Regulation) (OJ L 119, 4.5.2016, p. 1).
**2** Regulation (EU) 2018/1725 of the European Parliament and of the Council
of 23 October 2018 on the protection of natural persons with regard to the processing of
personal data by the Union institutions, bodies, offices and agencies and on the free
movement of such data, and repealing Regulation (EC) No 45/2001 and Decision
No 1247/2002/EC (OJ L 295, 21.11.2018, p. 39).

PE-CONS 34/1/23 REV 1 23

# **EN**

(37) The Commission should evaluate Union response measures adopted under this Regulation

as to their effectiveness and operation and, where appropriate, draw conclusions for the

purposes of future Union response measures. The Commission should also review this

Regulation after gaining sufficient experience with its application and implementation and

also its relationship to other Union policies and existing legal instruments, including

Council Regulation (EC) No 2271/96 **[1]** . The review of this Regulation should cover its

scope, functioning, efficiency and effectiveness. The Commission should report on its

assessment to the European Parliament and the Council,

HAVE ADOPTED THIS REGULATION:

**1** Council Regulation (EC) No 2271/96 of 22 November 1996 protecting against the effects of
the extra-territorial application of legislation adopted by a third country, and actions based
thereon or resulting therefrom (OJ L 309, 29.11.1996, p. 1.).

PE-CONS 34/1/23 REV 1 24

# **EN**

_Article 1_

_Subject-matter and scope_

1. This Regulation applies in cases of economic coercion by a third country. It lays down

rules and procedures to ensure the effective protection of the interests of the Union and its

Member States from economic coercion by a third country.

2. This Regulation establishes a framework for the Union to respond to economic coercion

with the objective of deterring economic coercion or obtaining the cessation of economic

coercion, whilst enabling the Union, as a last resort, to counteract economic coercion

through Union response measures.

This Regulation also establishes a framework for the Union to seek reparation for the

injury to the Union, where appropriate.

3. Any action taken under this Regulation shall be consistent with international law and be

carried out in the context of the principles and objectives of the Union’s external action.

4. This Regulation applies without prejudice to existing Union instruments and to

international agreements concluded by the Union, as well as to actions taken thereunder

that are consistent with international law, in the area of the common commercial policy,

and to other Union policies.

PE-CONS 34/1/23 REV 1 25

# **EN**

5. This Regulation does not affect the division of competences between the Union and its

Member States.

_Article 2_

_Economic coercion_

1. For the purposes of this Regulation, economic coercion exists 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.

2. In determining whether the conditions of paragraph 1 are met, the Commission and the

Council shall take into account the following:

(a) the intensity, severity, frequency, duration, breadth and magnitude of the third

country measure, including its impact on trade or investment relations with the

Union, and the pressure arising from it on the Union or a Member State;

(b) whether the third country is engaging in a pattern of interference seeking to prevent

or obtain particular acts from the Union, a Member State or another third country;

(c) the extent to which the third-country measure encroaches upon an area of the

Union’s or a Member State’s sovereignty;

PE-CONS 34/1/23 REV 1 26

# **EN**

(d) whether the third country is acting on the basis of a legitimate concern that is

internationally recognised;

(e) whether and in what manner the third country, before the imposition or application of

the third-country measure, made serious attempts, in good faith, to settle the matter

through international coordination or adjudication, either bilaterally or within an

international forum.

_Article 3_

_Definitions_

For the purposes of this Regulation, the following definitions apply:

(1) ‘third-country measure’ means any action or omission attributable to a third country under

international law;

(2) ‘particular act’ means any legal or other act, including an expression of a position, by an

institution, body, office or agency of, respectively, the Union or of a Member State, or of a

third country;

(3) ‘injury to the Union’ means a negative impact, including economic damage, on the Union

or a Member State, including on Union economic operators, caused by economic coercion;

PE-CONS 34/1/23 REV 1 27

# **EN**

(4) ‘third country’ means any State, separate customs territory or other subject of international

law, other than the Union or a Member State.

_Article 4_

_Examination of third-country measures_

1. The Commission may, on its own initiative or upon a duly substantiated request, examine

any third-country measure in order to determine whether it meets the conditions of

Article 2(1).

2. Where the Commission examines a third-country measure, it shall act expeditiously. The

examination shall normally not exceed 4 months.

The Commission shall carry out the examination based on substantiated information

gathered on its own initiative or received from any reliable source, including a Member

State, the European Parliament, economic operators or trade unions.

The Commission shall ensure the protection of confidential information in accordance with

Article 15 including, when necessary, the protection of the identity of the person who

supplies the information.

The Commission shall make publicly available a secure tool with a view to facilitating the

submission of information to the Commission.

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3. The Commission shall inform the Member States in a timely manner of the start of

examinations and of relevant developments with regard to ongoing examinations.

4. The Commission shall seek information about the impact of the third-country measures,

where necessary.

The Commission may request Member States to supply such information and Member

States shall act upon that request expeditiously.

By publishing a notice in _the Official Journal of the European Union_ and, where

appropriate, through other suitable means of public communication, the Commission may

invite stakeholders to submit information. The Commission shall specify a date by which

that information is to be submitted, taking into account the period indicated in the first

subparagraph of paragraph 2.

If the Commission publishes such a notice, it shall notify the third country concerned that

the examination has started.

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# **EN**

_Article 5_

_Determination with regard to the third-country measure_

1. Where, following an examination carried out in accordance with Article 4, the Commission

concludes that the third-country measure meets the conditions of Article 2(1), it shall

submit a proposal to the Council for an implementing act determining that the third

country measure meets the conditions of Article 2(1).

In that proposal, the Commission shall explain how those conditions are met.

The proposal shall set out an indicative period for the Commission to assess whether the

conditions of Article 8(1) are met. That period shall not exceed 6 months, unless a duly

justified longer period is necessary in light of the specific circumstances of the case.

2. In the proposal referred to in paragraph 1 or in a subsequent proposal for a Council

implementing act, the Commission shall, where appropriate, propose that the Council

determine that the third country be requested to repair the injury to the Union.

The assessment of whether it is appropriate to request the third country to repair the injury

to the Union shall be based on all circumstances of the case. That assessment shall be

based, in particular, on the nature and extent of the damage caused and the general

obligation under customary international law to make full reparation for the injury caused

by an internationally wrongful act.

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3. Prior to submitting the proposal referred to in paragraph 1 of this Article, where useful for

the purposes of the determination referred to in that paragraph, the Commission shall,

without prejudice to any engagement with the third country concerned pursuant to

Article 6, invite the third country to submit its observations within a specified period. Such

period shall be reasonable and shall not unduly delay the submission of the proposal

referred to in paragraph 1 of this Article.

4. Prior to submitting the proposal referred to in paragraph 1 of this Article, the Commission

shall inform the European Parliament of the conclusions of the examination carried out in

accordance with Article 4.

5. The Council shall adopt the implementing acts referred to in paragraphs 1 and 2, acting by

qualified majority.

The Council may amend the proposals referred to in paragraphs 1 and 2, acting by

qualified majority.

6. For the purposes of this Article, the Council shall act expeditiously.

The Council shall act within 8 weeks of the submission of the proposals referred to in

paragraphs 1 and 2.

By way of derogation from the second subparagraph, the Council may act after that eight

week period provided that it informs the Commission of a delay and of the reasons for that

delay.

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The total period for the Council to act shall normally not exceed 10 weeks from the

submission of the proposals referred to in paragraphs 1 and 2.

In the exercise of its implementing powers, the Council shall apply Article 2(1), which sets

out the conditions for the existence of economic coercion, and the criteria set out in

paragraph 2, second subparagraph, of this Article, and shall explain how those conditions

are met and criteria are applied.

7. Implementing acts adopted pursuant to this Article shall be published in the _Official_

_Journal of the European Union_ .

8. The European Parliament shall be informed of any implementing acts proposed or adopted

pursuant to this Article.

9. Where the Council adopts an implementing act as referred to in paragraph 1, the

Commission shall inform the third country accordingly and request that third country to

cease the economic coercion immediately.

10. Where the Council adopts an implementing act as referred to in paragraph 2, the

Commission shall request the third country to repair the injury to the Union within a

reasonable period.

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# **EN**

_Article 6_

_Engagement with the third country_

1. Following the adoption of an implementing act in accordance with Article 5, the

Commission shall provide adequate opportunity for consultations with the third country

with a view to obtaining the cessation of the economic coercion and, where so requested

pursuant to Article 5(10), reparation of the injury to the Union.

Where the third country enters into consultations with the Union in good faith, the

Commission shall engage in such consultations expeditiously.

In the course of such consultations, the Commission may explore options with the third

country, including the following:

(a) direct negotiations;

(b) submitting the matter to international adjudication;

(c) mediation, conciliation or good offices by a third party to assist the Union and the

third country in their efforts under this Article.

2. Without prejudice to paragraph 1, the Commission shall seek to obtain the cessation of the

economic coercion by raising the matter in any relevant international fora after having

consulted the Council, where applicable in accordance with the Treaties.

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# **EN**

3. Following the adoption of Union response measures pursuant to Article 8, the Commission

shall remain open to entering into consultations with the third country, in conjunction with

the potential suspension of any Union response measures pursuant to Article 12(2).

_Article 7_

_International cooperation_

The Commission shall ~~e~~ nter into consultations or cooperate with any third country affected by the

same or similar economic coercion or with any other interested third country, with a view to

obtaining the cessation of the economic coercion, after having consulted the Council, where

applicable in accordance with the Treaties.

Such consultations and cooperation may involve, where appropriate:

(a) sharing relevant information and experiences to facilitate a coherent response to such

economic coercion;

(b) coordination in relevant international fora;

(c) coordination in the response to the economic coercion.

The Commission shall invite, where appropriate, Member States to participate in such consultations

and cooperation.

Such consultations and cooperation shall not unduly delay the procedure under this Regulation.

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_Article 8_

_Union response measures_

1. The Commission shall adopt Union response measures by means of implementing acts

where all of the following conditions are met:

(a) action pursuant to Articles 5 and 6 has not resulted, within a reasonable period, in the

cessation of the economic coercion and, where requested pursuant to Article 5(10), in

the reparation of the injury to the Union;

(b) the adoption of Union response measures is necessary to protect the interests and

rights of the Union and its Member States in the particular case, in light of the

options available;

(c) the adoption of Union response measures is in the Union interest, as determined in

accordance with Article 9.

Where the economic coercion has ceased but the third country has not repaired in full the

injury to the Union, despite having been requested to do so, the Commission shall base the

assessment of whether the condition referred to in the first subparagraph, point (b), of this

paragraph, is met on all the circumstances of the case. That assessment shall be based, in

particular, on the nature and extent of the damage caused and the general obligation under

customary international law to make full reparation for the injury caused by an

internationally wrongful act.

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The implementing acts referred to in the first subparagraph of this paragraph shall be

adopted in accordance with the examination procedure referred to in Article 18(2).

2. The Commission shall select appropriate Union response measures from those set out in

Annex I. It shall determine which of those measures are appropriate on the basis of the

criteria for selection and design set out in Article 11.

In the implementing act referred to in paragraph 1 of this Article, the Commission shall

state the reasons why it considers that the conditions referred to in that paragraph are met

and why it considers that the Union response measures are appropriate in light of the

criteria referred to in Article 11.

3. Union response measures shall be adopted as:

(a) measures of general application; or

(b) measures which apply to certain natural or legal persons which engage or might

engage in activities falling under Article 207 TFEU and are connected or linked to

the government of the third country.

Union response measures referred to in the first subparagraph, point (a), may be designed

in such a way that they affect particular sectors, regions or operators of the third country in

accordance with the rules of origin and nationality set out in Annex II.

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4. Insofar as the third-country measure constitutes an internationally wrongful act, Union

response measures may consist of measures that amount to the non-performance of

international obligations towards the third country.

5. The Commission shall ensure coordination of the adoption of Union response measures

with the measures it adopts pursuant to Union legal acts other than this Regulation for the

purpose of responding to the economic coercion.

6. The implementing act referred to in paragraph 1 shall provide for a deferred date of

application which shall not be later than 3 months from the date of its adoption, unless, in

light of specific circumstances, a later date of application is provided for.

The Commission shall set that date, taking into account the circumstances of the case, to

allow for the notification of the third country pursuant to paragraph 7 and for the third

country to cease the economic coercion and, where requested, repair the injury to the

Union.

7. Upon adoption of the implementing act referred to in paragraph 1, the Commission shall

notify the third country thereof and:

(a) call upon the third country to immediately cease the economic coercion and, where

appropriate and where requested, to repair the injury to the Union;

(b) offer to negotiate a solution with the third country; and

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(c) notify the third country that the Union response measures will apply, unless the

economic coercion ceases and, where appropriate and where requested, the third

country repairs the injury to the Union.

8. Where the Commission has credible information that the economic coercion has ceased or

that the third country has taken concrete steps to cease the economic coercion and, where

appropriate, has repaired the injury to the Union before the deferred date of application set

in accordance with paragraph 6, the implementing act referred to in paragraph 1 shall

provide for a further deferral of the date of application. That deferral shall be for a period

specified in that implementing act and shall be such as to allow the Commission to verify

the actual cessation of the economic coercion.

In the event that the Commission has such credible information, it shall publish a notice in

the _Official Journal of the European Union_ indicating that it has such information and the

date of application of the implementing act referred to in paragraph 1, as deferred in

accordance with the first subparagraph of this paragraph.

9. If the third country ceases the economic coercion and, where appropriate, repairs the injury

to the Union before the date of application of the implementing act referred to in

paragraph 1, the Commission shall adopt an implementing act repealing that implementing

act.

That repealing implementing act shall be adopted in accordance with the examination

procedure referred to in Article 18(2).

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10. Notwithstanding paragraphs 7, 8 and 9, the implementing act referred to in paragraph 1

may provide that Union response measures apply without the Commission first calling,

pursuant to paragraph 7, point (a), upon the third country concerned to cease the economic

coercion or, where appropriate, repair the injury to the Union, or notifying, pursuant to

paragraph 7, point (c), the third country concerned that Union response measures will

apply where, in duly justified cases, that is necessary for the preservation of the rights and

interests of the Union or a Member State, in particular of the effectiveness of Union

response measures.

11. Notwithstanding paragraphs 6 and 8, where the economic coercion consists of a threat to

apply a third-country measure affecting trade or investment in accordance with

Article 2(1), the implementing act referred to in paragraph 1 of this Article shall apply

from the date on which that third-country measure is applied.

The Commission shall publish a notice in the _Official Journal of the European Union_

indicating the date of application of the implementing act as referred to in paragraph 1 of

this Article.

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# **EN**

_Article 9_

_Determination of the Union interest_

The determination of the Union interest in taking, suspending, amending or terminating Union

response measures shall be based on all available information and consist of an appreciation of the

various interests at stake, taken as a whole. Those interests include primarily the preservation of the

ability of the Union and its Member States to make legitimate sovereign choices free from

economic coercion, and all other interests of the Union or the Member States specific to the case,

the interests of Union economic operators, including upstream and downstream industries, and the

interests of Union final consumers affected or potentially affected by the economic coercion or by

Union response measures.

_Article 10_

_Conditions for applying Union response measures to certain natural or legal persons_

1. For the purposes of Article 8(3), first subparagraph, point (b), a natural or legal person may

be considered as connected or linked to the government of the third country where:

(a) that government beneficially owns more than 50 % of the equity interest in such

legal person, exercises directly or indirectly more than 50 % of the voting rights in it,

or has the power to appoint a majority of its directors or otherwise to legally direct its

actions;

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# **EN**

(b) such person benefits from exclusive or special rights or privileges granted in law or

in fact by the government of the third country concerned, where it operates in a

sector where that government limits the number of suppliers or buyers to one or

more, or it is allowed directly or indirectly by that government to exercise practices

which prevent, restrict or distort competition; or

(c) such person effectively acts on behalf of, or under the direction or instigation of, the

government of the third country concerned.

2. Where the Commission has reason to believe that a natural or legal person meets the

criteria set out in Article 8(3), first subparagraph, point (b), and is considering the adoption

of Union response measures with regard to that person, it shall inform that person of the

following:

(a) the reasons why the Commission believes that that person meets those criteria;

(b) the Union response measures that the Commission is considering to adopt with

regard to that person;

(c) the possibility for that person to submit, within a reasonable period, observations on

whether that person meets those criteria.

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# **EN**

3. For the purposes of paragraph 2, the Commission shall publish a notice in the _Official_

_Journal of the European Union_ and, where possible, notify the person concerned directly.

In that notice, the Commission shall give other interested parties the opportunity to submit

observations.

4. For the purposes of this Article, the Commission may seek any information it considers

relevant, including by requesting such information from Member States.

5. Without prejudice to Article 12, where, after the adoption of Union response measures

referred to in Article 8(3), first subparagraph, point (b), new substantial evidence is

submitted to the Commission, the Commission shall review whether the persons concerned

continue to meet the criteria set out in Article 8(3), first subparagraph, point (b), and shall

inform the persons concerned accordingly.

_Article 11_

_Criteria for selecting and designing Union response measures_

1. Union response measures shall be proportionate and not exceed the level of injury to the

Union, taking into account the gravity of the economic coercion, its economic impact on

the Union or a Member State and the rights of the Union and its Member States.

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# **EN**

2. The Commission shall select and design appropriate Union response measures on the basis

of available information, including as gathered pursuant to Article 13, and taking into

account the determination made pursuant to Article 5, the criteria set out in Article 2(2),

the determination of the Union interest pursuant to Article 9, any relevant action pursuant

to the Union’s common foreign and security policy, as well as the following criteria:

(a) the effectiveness of the Union response measures in inducing the cessation of the

economic coercion and, where requested, the reparation of the injury to the Union;

(b) the avoidance or minimisation of negative impact on:

(i) Union actors affected by Union response measures, in light of, _inter alia_, the

availability of alternatives for such actors, such as alternative sources of supply

for goods or services;

(ii) the investment environment in the Union or a Member State, including the

impact on employment and regional development policy;

(c) the avoidance or minimisation of negative impact on the promotion of economic

growth and employment through the protection of intellectual property rights as a

means to promote innovation and a knowledge economy in the Union or in a

Member State;

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# **EN**

(d) the potential to provide relief to Union economic operators affected by the economic

coercion;

(e) the avoidance or minimisation of negative effects of the Union response measures on

Union policies or objectives;

(f) the avoidance of disproportionate administrative burden and costs in the application

of the Union response measures;

(g) the existence and nature of any response measures enacted by third countries affected

by the same or similar economic coercion, including, where relevant, any

coordination pursuant to Article 7;

(h) any relevant criteria established in international law.

In selecting Union response measures, the Commission shall give preference to measures

which most effectively ensure compliance with criteria set out in the first subparagraph,

points (a) and (b).

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# **EN**

3. Without prejudice to paragraph 2, when selecting and designing an appropriate response

measure that affects a procedure whereby a public authority in the Union grants

authorisations, registrations, licenses or other rights to a natural or legal person for the

purposes of their commercial activities, the Commission shall consider Union response

measures in the following hierarchical order:

(a) measures affecting procedures initiated after the entry into force of the implementing

act referred to in Article 8(1);

(b) where measures referred to in point (a) of this paragraph are not available, measures

affecting procedures not yet completed upon the entry into force of the implementing

act referred to in Article 8(1).

Where none of the measures referred to in the first subparagraph are possible, the

Commission may, in exceptional circumstances, consider other response measures, where

it has been demonstrated, in light of the information and views gathered pursuant to

Article 13, that those other measures would ensure effectiveness, without

disproportionately affecting the upstream industries, downstream industries or final

consumers within the Union, or imposing a disproportionate burden on the process of

administration of relevant national regulations.

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When selecting and designing a Union response measure referred to in the

first subparagraph, the Commission shall take into account the level of harmonisation and

give preference to measures which affect procedures applied on a Union-wide basis or in

an area where extensive Union law exists.

Union response measures referred to in the first subparagraph shall not interfere with the

administrative decisions of Union and Member State authorities that are based on the

evaluation of scientific evidence.

4. Where necessary to achieve the objective of this Regulation, the Commission may adopt

Union response measures that affect the access of foreign direct investment to the Union or

trade in services and that apply to services supplied, or direct investments made, within the

Union by one or more legal persons established in the Union and owned or controlled by

persons of the third country.

The Commission may adopt such Union response measures where not applying them to

such services supplied or direct investments made would be insufficient to effectively

achieve the objective of this Regulation, in particular where the effect of Union response

measures could otherwise be avoided or circumvented by the third country or the person

concerned.

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# **EN**

In assessing whether to adopt such Union response measures, the Commission shall

consider, _inter alia_, the following criteria, in addition to those set out in paragraphs 1

and 2:

(a) the patterns of trade in services and investment in the sector targeted by the

envisaged Union response measures and the risk of avoidance or circumvention by

the third country or the person concerned of any Union response measures not

applying to services supplied, or direct investments made, within the Union;

(b) the possible effective contribution of Union response measures referred to in the first

subparagraph to obtaining the cessation of economic coercion and the reparation of

the injury to the Union;

(c) the existence of alternative measures capable of obtaining the cessation of the

economic coercion and the reparation of the injury to the Union that are reasonably

available and less restrictive of trade in services or investment within the Union.

The adoption of such Union response measures shall be duly justified in the implementing

act referred to in Article 8(1) in the light of the criteria set out in this paragraph.

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_Article 12_

_Amendment, suspension and termination of Union response measures_

1. The Commission shall keep under review the economic coercion, and the effectiveness of

the Union response measures and their effects on the Union interest.

2. Where the third country suspends the economic coercion, the Commission shall suspend

the application of the Union response measures for the duration of the third country’s

suspension.

Where the third country and the Union or the Member State concerned have concluded an

agreement, including on the basis of an offer from that third country, to submit the matter

to binding international third-party adjudication and that third country suspends its

economic coercion, the Commission shall suspend the application of the Union response

measures for the duration of the adjudication proceedings.

Where an adjudication decision or a settlement with the third country requires

implementation by the third country, the Commission shall suspend the application of the

Union response measures provided that the third country is engaged in the implementation

of that adjudication decision or settlement.

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The Commission shall suspend or resume the application of Union response measures

where necessary in light of the Union interest determined pursuant to Article 9, or where

necessary to facilitate continued engagement pursuant to Article 6(3) after the adoption of

Union response measures.

The Commission shall suspend or resume the application of Union response measures by

means of implementing acts. Those implementing acts shall be adopted in accordance with

the examination procedure referred to in Article 18(2).

3. Where it is necessary to make adjustments to Union response measures taking into account

Articles 2 and 11, or further developments, including the third country’s reaction, the

Commission shall amend, as appropriate, Union response measures, by means of

implementing acts.

Those implementing acts shall be adopted in accordance with the examination procedure

referred to in Article 18(2).

4. The Commission shall terminate Union response measures in any of the following

circumstances:

(a) the economic coercion has ceased and, where the Council has decided to request

reparation of the injury to the Union pursuant to Article 5(10), the injury to the

Union has been repaired;

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(b) the economic coercion has ceased, but the third country has not repaired the injury to

the Union despite the Council having decided to request reparation of the injury to

the Union pursuant to Article 5(10), unless maintaining the Union response measures

is necessary to achieve the objective of this Regulation, taking into account all

circumstances of the case;

(c) a mutually agreed solution has been reached;

(d) a binding decision in international third-party adjudication covering the matter of the

economic coercion requires the termination of the Union response measure;

(e) termination of the Union response measures is appropriate in light of the Union

interest determined pursuant to Article 9.

The Commission shall terminate Union response measures by means of implementing acts.

Those implementing acts shall be adopted in accordance with the examination procedure

referred to in Article 18(2).

5. On duly justified imperative grounds of urgency, such as to avoid irreparable damage to

the Union or a Member State or to continue to ensure consistency with the Union’s

obligations under international law as a result of the suspension or cessation of the

economic coercion, the Commission shall adopt immediately applicable implementing acts

in order to suspend or amend Union response measures.

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Those implementing acts shall be adopted in accordance with the procedure referred to in

Article 18(3) and they shall remain in force for a period not exceeding 2 months.

_Article 13_

_Information gathering related to Union response measures_

1. The Commission shall, before the adoption or amendment of Union response measures,

and may, before the suspension or termination of such measures, seek information and

views regarding the economic impact on Union economic operators by means of

publishing a notice in the _Official Journal of the European Union_ and, where appropriate,

through other suitable means of public communication.

The notice shall indicate the date by which the information and views are to be submitted

to the Commission.

The Commission may start gathering the information and views as referred to in the first

subparagraph at any time it deems appropriate.

2. For the purposes of paragraph 1, the Commission shall inform and consult stakeholders, in

particular associations acting on behalf of Union economic operators and trade unions, that

could be affected by potential Union response measures, and Member States' authorities

involved in the preparation or implementation of legislation that regulates the sectors that

could be affected by those measures.

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3. Without unduly delaying the adoption of Union response measures, the Commission shall

identify possible options for potential Union response measures and seek information and

views in particular on:

(a) the impact of such measures on third-country actors and their competitors, business

partners or clients within the Union, as well as users, final consumers or employees

within the Union;

(b) the interaction of such measures with relevant Member State legislation;

(c) the administrative burden which could be caused by such measures.

4. The Commission shall take utmost account of the information and views gathered pursuant

to this Article.

When submitting a draft implementing act to the Committee in the context of the

examination procedure referred to in Article 18(2), the Commission shall provide an

analysis of the envisaged measures and their potential impact.

That analysis shall include a thorough assessment of impact on both upstream and

downstream industries and final consumers within the Union and, if relevant, point out any

potential disproportionate impact.

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5. For the purpose of adopting immediately applicable implementing acts in accordance with

Article 12(5), the Commission shall seek information and views in a targeted manner from

relevant stakeholders, unless the exceptional situation of imperative grounds of urgency is

such that the gathering of information and views is not possible or not needed for objective

reasons, such as to ensure compliance with international obligations of the Union.

_Article 14_

_Single point of contact_

1. The Commission shall provide a single point of contact within the Commission for the

application of this Regulation and its coordination with any relevant Union legal acts and

for gathering information and providing cost and data analyses with a view to determining

the nature of the economic coercion.

2. For the purposes of this Regulation, the single point of contact shall, in full compliance

with the principle of confidentiality, be the main contact point for Union businesses and

private stakeholders affected by the economic coercion, including with regard to assistance

to be provided in the context of ongoing economic coercion for those businesses and

stakeholders.

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_Article 15_

_Confidentiality_

1. Information received pursuant to this Regulation shall be used only for the purpose for

which it was supplied, requested, or obtained.

2. A person who supplies information referred to in paragraph 1 may request such

information be treated as confidential. That request shall be accompanied by a non

confidential and meaningful summary of the information concerned or a statement of the

reasons explaining why the information concerned cannot be summarised.

3. The European Parliament, the Council, the Commission, Member States or their respective

officials shall not reveal any information of a confidential nature received pursuant to this

Regulation without specific permission from the person that supplies such information.

4. Paragraphs 2 and 3 shall not preclude the Commission from disclosing general information

in a meaningful summary, provided that the disclosure does not allow the identity of the

person that supplied it to be known.

The disclosure of such general information shall take into account the legitimate interest of

the parties concerned in not having confidential information disclosed.

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5. Member State officials shall be subject to a duty of professional secrecy with regard to any

confidential information which has come to their knowledge in the course of the

performance of their official duties in relation to this Regulation.

6. The Commission shall provide a secure and encrypted system to support direct cooperation

and exchange of information with Member State officials.

_Article 16_

_Rules of origin and nationality_

1. For the purposes of this Regulation, the origin of a good or service or the nationality of a

service provider, investment or intellectual property right holder shall be determined in

accordance with Annex II.

2. The Commission is empowered to adopt delegated acts in accordance with Article 17 to

amend points 2 and 3 of Annex II to take account of relevant developments in international

instruments and experience in the application of this Regulation or other Union acts.

_Article 17_

_Exercise of the delegation_

1. The power to adopt delegated acts is conferred on the Commission subject to the

conditions laid down in this Article.

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2. The power to adopt delegated acts referred to in Article 16(2) shall be conferred on the

Commission for a period of 5 years from … [the date of entry into force of this

Regulation]. The Commission shall draw up a report in respect of the delegation of power

not later than 9 months before the end of the five-year period. The delegation of power

shall be tacitly extended for periods of an identical duration unless the European

Parliament or the Council opposes such extension not later than 3 months before the end of

each period.

3. The delegation of power referred to in Article 16(2) may be revoked at any time by the

European Parliament or by the Council. A decision to revoke shall put an end to the

delegation of the power specified in that decision. It shall take effect the day following the

publication of the decision in the _Official Journal of the European Union_ or at a later date

specified therein. It shall not affect the validity of any delegated acts already in force.

4. Before adopting a delegated act, the Commission shall consult experts designated by each

Member State in accordance with the principles laid down in the Interinstitutional

Agreement of 13 April 2016 on Better Law-Making.

5. As soon as it adopts a delegated act, the Commission shall notify it simultaneously to the

European Parliament and to the Council.

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6. A delegated act adopted pursuant to Article 16(2) shall enter into force only if no objection

has been expressed either by the European Parliament or by the Council within a period of

two months of notification of that act to the European Parliament and the Council or if,

before the expiry of that period, the European Parliament and the Council have both

informed the Commission that they will not object. That period shall be extended by

two months at the initiative of the European Parliament or of the Council.

_Article 18_

_Committee procedure_

1. The Commission shall be assisted by a Committee. That committee shall be a committee

within the meaning of Regulation (EU) No 182/2011.

2. Where reference is made to this paragraph, Article 5 of Regulation (EU) No 182/2011 shall

apply.

Where the Committee delivers no opinion, the Commission shall not adopt the draft

implementing act and Article 5(4), third subparagraph, of Regulation (EU) No 182/2011

shall apply.

3. Where reference is made to this paragraph, Article 8 of Regulation (EU) No 182/2011 in

conjunction with Article 5 thereof, shall apply.

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_Article 19_

_Reporting and review_

1. Without prejudice to Regulation (EU) No 182/2011, the Commission shall keep the

European Parliament and the Council informed, regularly and in a timely manner, of

relevant developments in the application of this Regulation throughout the examination of

third-country measures, including the start thereof, the engagement with the third country

and the international cooperation, and during the period in which Union response measures

are in force.

In light of the information received, the European Parliament or the Council may invite,

where appropriate, the Commission for an exchange of views.

The European Parliament may express its views via any appropriate means.

2. The Commission shall evaluate Union response measures adopted pursuant to Article 8

within 6 months after their termination, taking into account stakeholder input, information

provided by the European Parliament and the Council and any other relevant information,

and shall submit an evaluation report to the European Parliament and the Council.

The evaluation report shall examine the effectiveness and operation of the Union response

measures, and, where appropriate, draw conclusions for the purposes of future Union

response measures as well as for the review of this Regulation pursuant to paragraph 3.

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# **EN**

3. No later than 3 years after the adoption of the first implementing act pursuant Article 5

or by … [5 years from the date of entry into force of this Regulation], whichever is earlier,

and every 5 years thereafter, the Commission shall review this Regulation and its

implementation and shall submit a report to the European Parliament and the Council. For

the purposes of that review, the Commission shall give particular consideration to any

issues which could arise as regards the relationship of this Regulation to other existing

Union instruments.

_Article 20_

_Entry into force_

This Regulation shall enter into force on the twentieth day following that of its publication in the

_Official Journal of the European Union_ .

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Strasbourg,

_For the European Parliament_ _For the Council_

_The President_ _The President_

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# **EN**

**ANNEX I**

Union response measures pursuant to Article 8

1. The imposition of new or increased customs duties, including the re-establishment of

customs duties at the most-favoured-nation level or the imposition of customs duties

beyond the most-favoured-nation level, or the introduction of any additional charge on the

importation or exportation of goods, which may amount, as necessary, to the

non-performance of applicable international obligations as regards any tariff concessions.

2. The introduction or increase of restrictions on the importation or exportation of goods,

including, where appropriate, on goods subject to export control, whether those restrictions

are made effective through quotas, import or export licences or other measures, or the

introduction or increase of restrictions on the payment for goods, which may amount, as

necessary, to the non-performance of applicable international obligations.

3. The introduction of restrictions on trade in goods made effective through measures

applying to transiting goods or internal measures applying to goods, which may amount, as

necessary, to the non-performance of applicable international obligations.

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# ANNEX I EN

4. The following measures, which may amount, as necessary, to the non-performance of

applicable international obligations concerning the right to participate in tender procedures

in the area of public procurement:

(a) the exclusion of goods, services or suppliers of goods or services of the third country

concerned from public procurement or the exclusion from public procurement of

tenders the total value of which is made up of more than 50 % of goods or services

originating in the third country concerned, unless a lower percentage is necessary in

light of the exceptional circumstances of the case and provided that the remaining

percentage of goods or services is not covered by Union commitments under the

Agreement on Government Procurement (GPA) concluded within the World Trade

Organization or another agreement on public procurement concluded between the

Union and a third country other than the third country concerned; or

(b) the imposition of a score adjustment **[1]** on tenders of goods or services of the third

country concerned or on tenders of suppliers of goods or services of the third country

concerned.

**1** Score adjustment means an obligation for contracting authorities or entities conducting
public procurement procedures to relatively diminish, subject to certain exceptions, the
score of a tender resulting from its evaluation, on the basis of the contract award criteria
defined in the relevant public procurement documents, by a given percentage. In cases
where price or cost is the only contract award criterion, the score adjustment means the
relative increase, for the purpose of the evaluation of tenders, by a given percentage of the
price offered by a tenderer.

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# ANNEX I EN

5. The imposition of measures affecting trade in services, which may amount, as necessary, to

the non-performance of applicable international obligations regarding trade in services.

6. The imposition of measures affecting the access of foreign direct investment to the Union,

which may amount, as necessary, to the non-performance of applicable international

obligations.

7. The imposition of restrictions on the protection of intellectual property rights or their

commercial exploitation, in relation to rightholders that are nationals of the third country

concerned, which may amount, as necessary, to the non-performance of applicable

international obligations with respect to trade-related aspects of intellectual property rights.

8. The imposition of restrictions for banking, insurance, access to Union capital markets and

other financial service activities, which may amount, as necessary, to the non-performance

of applicable international obligations with respect to financial services.

9. The introduction or increase of restrictions on the possibility to place on the Union market

goods falling under Union legal acts on chemicals, which may amount, as necessary, to the

non-performance of applicable international obligations.

10. The introduction or increase of restrictions on the possibility to place on the Union market

goods falling under the Union sanitary and phytosanitary legal acts, which may amount, as

necessary, to the non-performance of applicable international obligations.

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# ANNEX I EN

**ANNEX II**

Rules of Origin and Nationality

1. The origin of a good shall be determined in accordance with Regulation (EU) No 952/2013

of the European Parliament and of the Council **[1]** .

2. The origin of a service, including a service supplied in the area of public procurement,

shall be determined on the basis of the nationality of the natural or legal person providing

it.

The nationality of the service provider shall be deemed to be:

(a) in the case of a natural person, the country of which the person is a national or where

the person has a right of permanent residence;

(b) in the case of a legal person, any of the following:

(i) if the service is provided other than through a commercial presence within the

Union, the country where the legal person is constituted or otherwise organised

under the laws of that country and in the territory of which the legal person is

engaged in substantive business operations;

**1** Regulation (EU) No 952/2013 of the European Parliament and of the Council
of 9 October 2013 laying down the Union Customs Code (OJ L 269, 10.10.2013, p. 1).

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# ANNEX II EN

(ii) if the service is provided through a commercial presence within the Union:

(a) if the legal person is engaged in substantive business operations in the

territory of the Member State where the legal person is established, such

that it has a direct and effective link with the economy of that Member

State, the Member State in which it is established or, if Union response

measures apply to that person, the nationality or the place of permanent

residence of the natural or legal person or persons who own or control the

legal person in the Union;

(b) if the legal person providing the service is not engaged in substantive

business operations such that it has a direct and effective link with the

economy of the Member State in which it is established, the origin of the

natural or legal persons which own or control it.

The legal person shall be considered to be ‘owned’ by persons of a given country if more

than 50 % of the equity interest in it is beneficially owned by persons of that country and

‘controlled’ by persons of a given country if such persons have the power to name a

majority of its directors or otherwise to legally direct its actions.

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# ANNEX II EN

3. The nationality of an investment shall be:

(a) if the investment is engaged in substantive business operations in the territory of the

Member State where the investment is established such that it has a direct and

effective link with the economy of that Member State, the nationality of the Member

State in which it is established or, if Union response measures apply to the natural or

legal person that owns or controls the investment in the Union, the nationality or

permanent residence of that natural or legal person;

(b) if the investment is not engaged in substantive business operations such that it has a

direct and effective link with the economy of the Member State in which it is

established, the nationality of the natural or legal person that owns or controls it.

The investment shall be considered to be ‘owned’ by persons of a given country if more

than 50 % of the equity interest in it is beneficially owned by persons of that country and

‘controlled’ by persons of a given country if such persons have the power to name a

majority of its directors or otherwise to legally direct its actions.

4. Regarding trade-related aspects of intellectual property rights, the term ‘nationals’ shall be

understood in the same sense as it is used in paragraph 3 of Article 1 of the WTO

Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and future

amendments thereof.

Two statements have been made with regard to this Regulation and can be found in OJ C … and at

the following ELI link[s]: [OJ: please insert the publication references and ELI link[s] to the

statements]

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# ANNEX II EN