EU approves new trade tool to counter economic pressure by third countries

Legislation introduces ‘new trade instrument’ as deterrent, allow EU to fight economic coercion, respond with countermeasures

Aysu Bicer  | 03.10.2023 - Update : 03.10.2023
EU approves new trade tool to counter economic pressure by third countries


The European Parliament (EP) gave the green light Tuesday to establish a robust mechanism to counter economic pressure exerted by foreign countries to influence the policies of EU member states.

The legislation introduces a "new trade instrument" as a deterrent but it will allow the EU to fight economic coercion and respond with countermeasures.

The mechanism could be used against countries such as China -- accused by the EU of engaging in economic coercion.

The EU as a whole and individual member states will have the means to shield themselves against economic coercion and undue pressure from foreign nations by taking targeted measures.

The innovative mechanism will come into play when non-EU countries attempt to wield economic pressure on the EU or a specific member state through trade or investment measures, or a threat of either.

Among measures to respond to economic coercion are restrictions on trade in goods and services, limitations on foreign direct investments, imposition of import or export licenses and the creation of barriers to accessing public procurement opportunities.

Key to the effectiveness of the mechanism is the European Commission's role in conducting thorough investigations into economic coercion cases.

Once an investigation is complete, the Commission will present findings to member states.

Subsequently, member states will decide, by a majority vote, whether to activate the mechanism and authorize the Commission to take appropriate action.

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