The Anti-Coercion Instrument has been adopted

By Ass.-Prof. Dr. Thomas Verellen, University of Utrecht [1]

 

On October 23rd, 2023, the Council adopted the Anti-Coercion Instrument. The adoption by the Council comes a couple of weeks after the European Parliament gave its consent to the instrument on October 3rd. The Council’s press release states that the regulation will be signed on November 22nd. Assuming the regulation will be published in the Official Journal on that same day, it will enter into force on December 12th, 2023. In this blog post, I look at the Anti-Coercion Instrument from the perspective of democratic accountability. I will make the case that a unilateral trade instrument as political as the Anti-Coercion Instrument needs strong democratic control mechanisms. Such mechanisms are lacking.

 

No instrument better incarnates the unilateral turn EU trade policy has gone through in recent years. Faced with a rapidly changing geopolitical environment, globalization that has shifted into reverse, and an increasing weaponization of the interdependence that globalization has brought about between economies, the EU has revamped its trade policy toolbox.

Under the umbrella of its ‘open strategic autonomy’ agenda, the Commission has launched a series of legislative proposals to endow the EU with new unilateral trade instruments. As I’ve argued elsewhere, these instruments are transforming executive power in the EU. The Commission receives new powers. Many of these powers involve the exercise of discretion: the Commission gets to start and end investigations; it gets to assess whether or not action is in the EU’s interest; it gets to decide on the type and breadth of measures.

 

Not your parents’ trade defence instruments

There is an important distinction between the new unilateral trade instruments and traditional trade defence instruments such as anti-dumping. Whereas anti-dumping or anti-subsidy investigations are embedded within the WTO legal framework, the same is not the case for the new generation of unilateral trade instruments such as the International Procurement Instrument, the Foreign Subsidies Regulation, the Deforestation Regulation or indeed the Anti-Coercion Instrument. Stronger still, while the Commission maintains all of the EU’s instruments fully comply with (general) international law, legal scholars have questioned whether that is indeed the case (see e.g. here, here and here).

At the very least, the lack of WTO legal disciplines further amplifies the discretion the Commission enjoys as it gets to wield its newfound powers. This increase in discretion, coupled with the real redistributive effects trade measures bring about, implies a need for effective accountability mechanisms. On this front, the Anti-Coercion Instrument as it was initially conceived by the Commission raised a red flag.

As the Commission saw it, the Commission would start investigations, it would determine whether the concerned third country engages or has engaged in economic coercion, it would impose measures and it would terminate them. It would do so unilaterally, without an opportunity for Member States or the European Parliament to oppose it. (For the Comitology experts: the Commission would have proceeded through the advisory procedure, which does not grant Member States the power to block the Commission’s proposal.)

The Commission’s procedural proposal was not to the liking of the Member States, who perceived it as power grab. It thus did not come as a surprise when in June this year, the provisional agreement that came out of the trilogue negotiations between Commission, Parliament and Council included an important change to the procedure to impose measures under the Instrument.

Under the new arrangement, the regulation grants the Council, not the Commission, the power to determine the existence of economic coercion and to decide whether further action by the EU is needed to repair the injury caused. The Council would act by qualified majority. In a second step, the Commission would still be able to decide on the shape and form of the measures to be taken.

However, here too, Member States increased their involvement in the procedure as compared to the initial Commission proposal. While in the initial proposal Member States would merely be asked for their opinion, in the final version of the Anti-Coercion Instrument a qualified majority of Member States will be able to block a Commission proposal to impose, amend or terminate measures.

 

Where is the European Parliament?

Neither in the Commission’s initial proposal nor in the final version of the Anti-Coercion Instrument does the European Parliament play a role in the decision-making process. In the logic of the Lisbon Treaty, this is not surprising: since Member States generally implement EU law, they should control the Commission when it gets to exercise implementing powers.

This logic can be contrasted to that underlying the exercise of control by Council and Parliament over the Commission’s use of delegated acts. Here, a traditional principal-agent logic applies: Council and Parliament mandate the Commission, which implies both Council and Parliament get to exercise control over the Commission.

The Anti-Coercion Instrument may very well end up never being used. However, the powers are there, and if they do end up being used, their impact may be far-reaching. The determination of whether ‘economic coercion’ is present will, moreover, be as much a legal as a political assessment. Given the high political stakes, it would have made sense to grant a role not only to the Council in the determination of economic coercion, but also to the Parliament.

To be clear, the Parliament should not need to give its active approval to a proposal to label a third country practice coercive. And neither should the Council, for that matter. (The Lisbon Treaty requires a special justification for the allocation of implementing powers to the Council. The Anti-Coercion Instrument does not offer such a justification.) Parliament and Council should however each separately have the opportunity to block proposals that they fundamentally disagree with. This is the arrangement that currently applies to delegated acts.

It is unfortunate that the Anti-Coercion Instrument does not provide for similar mechanisms of democratic control. The Council’s involvement in the determination of economic coercion is hardly sufficient in this regard. The Council operates as a black box and individual Member States can be outvoted. To offset the loss of control by individual Member States over the decision-making process, the European Parliament should have been granted a role in the decision-making process.

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[1] The post originally appeared first on the contributor’s personal website, see here.