The EU wants to stop third countries muddling in EU policy decisions. Businesses must take note, they may be impacted by restrictions & higher costs.
Why this measure?
The EU states that rising geopolitical tensions, weakened international cooperation and increasingly weaponised trade and investment have triggered the use of coercive practices that aim to force the EU to change tone: “We have seen that economic coercion can come from a variety of countries, and causes broad concern”.
The European Parliament and several Member States have raised their concerns about the issue of coercion and asked the Commission last year to develop a mechanism to deter and counter it
Coercion means making you do something against your will by threat
Generally speaking, Coercion is persuasive a party to act involuntarily by use of threats, including force. It involves a set of various types of forceful actions that violate the free will of an individual to induce a desired response, for example, a bully demanding lunch money from a student or the pupil getting beaten.
What does coercion mean in law?
In law, coercion is codified as a duress crime. Such actions are used as leverage, to force the victim to act in a way contrary to their interests. Coercion may involve the actual infliction of physical pain/injury or psychological harm to enhance the credibility of a threat. The threat of further harm may lead to the cooperation or obedience of the person being coerced.
And economic coercion?
‘Economic coercion' is where a third country (like the UK or China or Russia) puts pressure on the EU (or its members) to force it to make a particular choice by applying, or threatening to apply, measures affecting trade or investment.
Such practices unduly interfere with the legitimate policymaking space and undermine the EU's open strategic autonomy.
Can you give an example of coercive practices?
There are many types of coercive practices that aim to force the EU to change its tone:
introducing (or threatening to introduce) extra, discriminatory import duties,
intentional delays or refusing (or threatening to refuse) authorisations needed to do business.
impose discriminatory selective border or safety checks on goods from a given EU country,
organise state-sponsored boycotts against the goods or investors
Who decides where when this applies?
Whether a third county action fulfils those conditions would be decided on a case-by-case basis.
What will happen?
A formal determination will prompt engagement with the coercing country to resolve the issue. The engagement may take the form of direct negotiations and may involve mediation, arbitration, adjudication or other suitable avenues.
As a last resort, when the economic coercion persists, the Union may consider taking countermeasures against the country in question to counteract such economic coercion. The range of potential measures is designed to be broad.
The proposed ACI lists classical measures related to the fields of goods and services, but also of intellectual property rights and foreign direct investment.
Additionally, various restrictions on access to the EU market, such as public procurement, capital, authorisation of products under chemical and sanitary rules, as well as access to EU-funded research programmes.
Articles 4 and 5 of the proposal states that where coercion is identified, the EU must determine what third-country measure is appropriate. the third country concerned is informed of any measures considered and will be contacted to explore options with a view to obtaining the cessation of the economic coercion. Such options could include. e.g.
mediation, conciliation or good offices to assist the Union and the third country concerned in these efforts;
submitting the matter to international adjudication.
The EU can also raise the matter in the relevant international forum.
The way this is foreseen is illustrated here:
Rules of origin
The ACI would empower the EU Commission to adopt delegated acts to amend the rules of origin related to services and investment provided in the legislation. These have been listed in Annex 2 of the ACI and deal with services and investment, not trade in goods.
Actions against individuals and companies
The EU can designate individuals and enact economic sanctions where the EU finds that
that such person is connected or linked to the government of the third country concerned; or,
that such person is connected or linked to the government of the third country concerned and has additionally caused or been involved in or connected with the economic coercion.
Following the Commission's proposal with the accompanying impact assessment, the ACI will now follow the ordinary legislative process in the European Parliament and Council of the European Parliament for adoption. In the joint Declaration, the European Parliament and the Council have committed to consider the proposal in a timely manner. Stakeholders and citizens may still provide feedback on the proposal during the following eight weeks. The Commission will report on to the Council and Parliament on the feedback received.
While you are here, you may be interested in
EU Export Control Clinic 821 On-Demand Training
Where to find even more help and support
For online support, join our educational live webinars, subscribe to insightful short Twitter updates and informative YouTube videos, and stop by at our expert blog page, updated weekly: https://www.customsmanager.org/customs-global-trade-blog
Join us on Linked In, too: www.linkedin.com/company/customs-manager-ltd
We also offer a resources hub that covers a lot of topics, videocasts and step by steps guidance: https://www.customsmanager.org/ -> Resources
There are regular customs and global trade update sessions to discuss what is coming up: https://www.customsmanager.org/customs-and-global-trade-update
Subscribe to our free newsletter to never miss an important update on our social media channels and expert blogs and get a round-up on all the important changes, law updates and guidance modifications for the EU and the UK).
You can also call our helpline on 079146450183. The first call is free, after this, we charge a moderate fee to get instant expert support. You can access it at https://www.customsmanager.org/expert-helpline-blog-training-exclusive-briefings
If you know of a business who would also find e-mails or customs and global trade blog entries helpful, please forward it on, or suggest they register to receive them directly to their inbox register to get these updates directly to their inbox.
About Customs Manager Ltd.
Working with us means having a Customs Advisor, Global Trade Expert and Export Controls Consultant, on speed-dial. If you are looking for a customs consultant UK and EU, let us help you trade effectively, efficiently and, of course, compliantly, wherever you want to go in the world.
Need to stay up-to-date with changing customs and global trade rules? We monitor legislation so our clients don't have to. Learn about all changes in our fresh expert blog, join exclusive briefings and ask any questions 24/7 through to the VIP hotline. Or sign up to our no-charge, insightful newsletter.
Entrust us with your training needs and help us to upskill you and your teams in English, German, French and Spanish. We offer public and private live, in-house and on-demand (study from anywhere and anytime) courses.
To complete our support for globally trading businesses, we are also a UK Customs Broker. We act as a customs clearance agent on behalf of many EU and UK businesses, assisting with customs documentation and all other formalities to ensure the customs clearance of our goods. Whether you’re seeking a long-term partner to look after your customs clearance or require support for a one-off shipment, please don’t hesitate to get in touch to discuss your requirements.
Customs Manager Ltd. owns the copyright in this information, unless other sources are identified.
You are not allowed to use this information in any way that infringes the intellectual property rights in it. You may have to hold a valid licence to use this information. A licence can be obtained by becoming a Premium subscriber to the Customs Managers’ Trade Intelligence service. As a Premium subscriber, you may download and print this information which you may then use, copy or reproduce for your own internal non-profit-making purposes.
However, under no circumstances are you permitted to use, copy or reproduce this information to profit or gain.
In addition, you must not sell or distribute this information to third parties who are not members of your organization, whether for monetary payment or otherwise.
This information is intended to serve as general guidance only and does not constitute legal advice. We cannot guarantee the quality, content, or accuracy of the information provided on this page as laws and information change regularly. Moreover, the application and impact of laws can vary widely based on the specific facts involved. This information should not be used as a substitute for consultation with professional legal or other competent advisers. Before making any decision or taking any action, you should consult a Customs Manager Ltd. professional.
In no circumstances will Customs Manager Ltd, be liable for any decision made or action was taken in reliance on the information contained within this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.