What are EU anti-coercion instruments? The ‘nuclear option’ that could be used against Trump
The ACI, which was finally approved in 2023, is seen by many as a ’nuclear option’
France has called for the European Union to use wide-ranging "anti-coercion" measures targeting U.S. services if President Donald Trump follows through on his threat to impose more tariffs on his NATO allies over Greenland.
HOW DID WE GET HERE?
Trump threatened Saturday to impose more tariffs on eight European nations until the U.S. is allowed to buy Greenland, citing U.S. national security concerns.
EU governments are drawing up retaliatory measures, including possibly hitting the U.S. with 93 billion euros' worth of tariffs or the so far unused "anti-coercion instrument," which permits investment restrictions and curbs the export of services such as those provided by U.S. digital giants.
The ACI, which was finally approved in 2023, is seen by many as a "nuclear option" that is ideally meant as a deterrent.
POSSIBLE ANTI-COERCION MEASURES
The ACI allows the 27-nation EU to retaliate against third countries that put economic pressure on its member countries to force a policy shift, and offers far wider scope for action than just counter-tariffs on U.S. exports.
The ACI has a 10-point list of possible measures on goods and services. They include:
- Curbs on imports or exports of goods such as through quotas or licences.
- Restrictions to public tenders in the bloc, worth some 2 trillion euros ($2.3 trillion) per year. Here the EU has two options: Bids, such as for construction or defence procurement, could be excluded if U.S. goods or services make up more than 50% of the potential contract. Alternatively, a penalty score adjustment could be attached to U.S. bids.
- Measures impacting services in which the U.S. has a trade surplus with the EU, including from digital service providers Amazon AMZN.O, Microsoft MSFT.O, Netflix NFLX.O or Uber UBER.N.
- Curbs on foreign direct investment from the United States, which is the world's biggest investor in the EU.
- Restrictions on protection of intellectual property rights, on access to financial services markets and on the ability to sell chemicals or food in the EU.
The EU is supposed to select measures that are likely to be most effective to stop the coercive behavior of a third country and potentially to repair injury.
HOW DOES THE EU INVOKE THE ACI?
The ACI was proposed in 2021 as a response to criticism within the bloc that the first Trump administration and China had used trade as a political tool.
European law gives the European Commission up to four months to examine possible cases of coercion. If it finds a foreign country's measures constitute coercion, it puts this to EU members, which have another eight to 10 weeks to confirm the finding.
Confirmation requires a qualified majority of EU members - a higher hurdle to clear than that for applying retaliatory tariffs.
The Commission would normally then negotiate with the foreign country in a bid to stop the coercion. If that fails, it can implement ACI measures, again subject to a vote by EU members. These should enter into force within three months.
The whole process could take anywhere from a few months to a year to complete.
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