Who Manufactured the EU’s Trade Bazooka? ACI, ECFR, and the Geoeconomic Policy-Making
Author: Jaša Veselinovič (Research Associate, Vrije Universiteit Amsterdam)
Introduction
In response to Donald Trump’s intensifying desire to ‘acquire’ Greenland, the EU adopted an open-carry attitude to its “trade bazooka”. The Anti-Coercion Instrument (ACI) has been brandished more openly by European political elites with encouragement from across the Atlantic by the likes of Paul Krugman and Henry Farrell. In more subdued terms, using ACI against the US has been talked about since the beginning of the second Trump presidency; as tariff-rattling was only starting and again six months later when the EU capitulated by signing up to the trade deal that would hopefully appease Trump. Von der Leyen also hinted at ACI in the rare earth standoff with China.
The power and procedural aspects of ACI, whose origins go back to the first Trump presidency and the US’ economic bullying of the EU on account of trying to keep the Iran Deal alive and proposing a tax on digital services, had been extensively discussed in the past months. But another aspect is worth noting. Asked about the EU’s potential use of ACI, US Treasury Secretary Scott Bessent mockingly responded: “Well, having worked with the Europeans, my guess is their next move will be to form a working group, the dreaded 'European working group”. And indeed, for all the talk of ‘triggering’ the bazooka, countering coercion via ACI involves a lengthy months-long process not unlike the caricature that Bessent painted.
Especially when compared to actors with more agile -most often meaning more centralized and less accountable/checked - economic statecraft like the US and China, the triggering of the ACI could be seen as another aspect of the broader question of the uneven and contested transformation of EU’s governance amid a broader shift towards state capitalism. In other words, the EU’s widely-discussed ‘geoeconomic turn’ is not just about an ideas-first paradigm shift, the introduction of new policy tools, or conflicts and tradeoffs between Member States and social forces. Instead, the pronounced blurring and cross-leveraging of matters previously neatly grouped under either economics or security has elicited a gradual transformation of the EU state apparatus and contested emergence of what might be called geoeconomic governance, or the ‘economic security state’.[1] It is in this respect that the ACI offers an interesting case. Rather than focusing on its (non)implementation, it is the origins of the ACI in the informal, confidential, and think tank-facilitated transnational policymaking spaces, which include private actors, that are instructive about the making of the EU economic security state.
As I argue in my recently published article, the origins of the ACI should be traced back to the informal transnational sphere of European policy-making, facilitated by think tanks. While the Commission published the legislative proposal in December 2021, and ACI entered into force two years later, I show that the early ideas and discussions for what would become the ACI were gestating since 2018, in particular in member states’ co-funded projects by the European Council on Foreign Relations (ECFR). In what follows, I reconstruct the ‘making of’ ACI and reflect on its significance for geoeconomic policymaking.
The key argument of my article is that the ACI’s origins lie not primarily in formal EU institutions or intergovernmental bargaining, but in the informal transnational policy space facilitated by think tanks, above all the ECFR. The ACI is a product of think tanks-facilitated process in which ideas, coalitions, red lines, and compromises were worked out in advance, in confidential and semi-private settings convening policymakers and private business, before they ever appeared as legislative proposals. This mode of policy formation is arguably not unique to the ACI, but the case offers an unusually clear window into one of the avenues through which the EU’s emerging economic security state is being assembled.
From Trump, Iran, and “Shallow Sovereignty” to Economic Coercion
The standard origin story of the ACI usually begins with two shocks: Donald Trump’s first presidency and China’s coercive campaign against Lithuania. Both are important, but they obscure a longer gestation period. The earliest building blocks of the ACI were laid in the aftermath of the US withdrawal from the Iran nuclear deal or the Joint Comprehensive Plan of Action (‘JCPOA’) in 2018 and Washington’s imposition of extraterritorial sanctions on European firms.
These sanctions exposed what Pascal Lamy and coauthors at the time described as the EU’s “shallow sovereignty”: Europe’s inability to protect its firms and policies from US economic pressure, despite being a regulatory superpower. This moment catalysed a broader debate within European foreign-policy circles about asymmetric interdependence and whether the EU could (or should) develop its own capacity for economic deterrence.
It was in this context that the ECFR launched its European Sovereignty project, initiated by EEAS and co-funded by several EU foreign ministries and the Open Society Foundations. One of the project’s outputs, a 2019 report by Ellie Geranmayeh and Manuel Lafont Rapnouil, explicitly floated the idea that the EU needed a formal mechanism to impose asymmetrical countermeasures against economic coercion, ideally as a deterrent rather than as a tool of escalation. Crucially, their proposal avoided advocating EU extraterritorial sanctions ‘à la Washington’. Instead, it envisioned an instrument rooted in existing EU competences, capable of raising costs for coercers without mirroring US legal overreach. This was the conceptual seed of what would later become the ACI.
The Task Force: Pre-Cooking Economic Security
The decisive step came with the creation of the ECFR Task Force on Strengthening Europe against Economic Coercion. This initiative was not mandated by EU institutions but launched by the ECFR itself, responding to a perceived lack of structured dialogue between key capitals, especially Paris and Berlin, on economic security.
The Task Force brought together around 40 participants from eight EU member states and EU institutions, including senior officials from foreign ministries, parliamentarians, and, critically, corporate representatives. France and Germany jointly funded the exercise, with Sweden, the Netherlands, Czechia, and Spain also involved. All participants operated under strict confidentiality agreements; the full list of members was never published.
This setting mattered. Economic coercion was a new and poorly defined problem, cutting across trade, foreign policy, and national security. Member states held diverging views on everything from WTO compatibility and decision-making procedures to relations with the US and China. Corporations, meanwhile, were both the targets of coercion and indispensable actors in any response. The Task Force provided a rare space where these actors could test ideas, surface concerns, and explore trade-offs without committing publicly.
From the ECFR’s perspective, the Task Force served multiple functions at once. It was a listening device, revealing national and sectoral red lines. It was an incubator for policy ideas that could plausibly command cross-European support. And it was a mechanism for in-advance consensus-building - or at least informed dissensus - before proposals entered the EU’s formal machinery.
Naming the Problem—and Designing the Solution
The Task Force’s deliberations fed directly into a series of ECFR publications that would shape the subsequent policy debate. Most notably, a 2020 report by Jonathan Hackenbroich gave conceptual coherence to the phenomenon by naming it: economic coercion. Rather than treating US sanctions, Chinese trade pressure, or export controls as isolated irritants, the report framed them as manifestations of a common structural challenge confronting European sovereignty.
Within this framework, the proposed “Collective Defence Instrument”, a clear precursor to the ACI, was positioned as one element in a broader economic sovereignty agenda. Its defining features already resembled the final ACI: deterrence rather than retaliation as the primary goal, reliance on existing EU trade competences, and an institutional design that avoided unanimity-based foreign-policy procedures.
The ECFR’s 2021 follow-up report went further, spelling out design options, risks, and trade-offs in detail. It discussed which forms of coercion should trigger EU action, what countermeasures might be credible, and how decision-making authority should be distributed between the Commission and member states. Many of the most contentious issues that were later fought over in the Council and Parliament, such as the role of qualified majority voting, were already being dissected here.
The importance of this work is underscored by the fact that when the Commission published its Inception Impact Assessment for the ACI in early 2021, it explicitly cited the ECFR report as its primary evidence base. At that stage, the Commission openly acknowledged that it lacked sufficient data on economic coercion and potential responses. The think-tank-generated analysis filled that gap.
From Informal Space to Formal Proposal
By the time the Commission unveiled the ACI proposal in December 2021 (coinciding with China’s pressure on Lithuania), the ground had already been carefully prepared. The problem had been defined, policy options mapped, and national sensitivities anticipated. This helps explain why the Commission could move relatively swiftly and confidently on such a sensitive instrument.
The ECFR continued to play a role after the proposal was tabled, hosting high-level events, shaping media narratives, and acting as a bridge between policymakers and the broader expert community. Trade Commissioner Valdis Dombrovskis publicly acknowledged the think tank’s contribution to the preparatory phase.
None of this implies that the ACI was simply an ECFR product. The final regulation reflects compromises forged during consultations and trilogues, and many actors influenced its outcome. But without the Task Force and the surrounding ecosystem of informal deliberation, it is difficult to imagine the ACI emerging in its eventual form (or at all).
What the ACI Reveals About EU Geoeconomic Governance
Looking beyond the specifics of the ACI, this pre-history tells us something important about how the EU’s geoeconomic turn is unfolding. First, it shows that ideas do not simply originate within institutions like the Commission and then diffuse outward. They are often incubated in transnational spaces where think tanks mediate between governments, businesses, and EU bodies.
Second, it highlights the centrality of informality and confidentiality in EU economic security policymaking. The more issues blur the line between economics and security, the more policy formation shifts into parallel arenas where risks can be assessed and interests aligned away from public scrutiny.
Third, the case foregrounds the evolving role of corporate actors. Firms were not merely lobbyists reacting to a developing proposal; they were involved from the outset in defining what economic coercion is and how the EU might respond. This reflects a deeper structural feature of geoeconomics: states increasingly depend on private actors not only to implement policy, but to make it workable in the first place.
Finally, the ACI complicates the familiar story of a power grab by a “geopolitical Commission”. The Commission’s ability to act decisively was enabled by prior consensus-building among member states and stakeholders - a consensus that was, in important part, forged outside formal EU channels.
[1] Some initial research has already looked into the ongoing processes of institutional transformation, development of new geoeconomic capacities and policy-making processes (here, here, here, and here).
