EU proposal to establish a retaliation mechanism against commercial competitors

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EU proposal to establish a retaliation mechanism against commercial competitors

EU proposal to establish a retaliation mechanism against commercial competitors

The European Union (EU) proposed the establishment of a mechanism that would allow rapid economic sanctions to its commercial competitors. According to the mechanism called ‘Anti-Coercion Instrument’, foreign countries that implement or threaten to implement measures affecting the trade or investments of the EU or its member states will be immediately intervened.

EU proposal to establish a retaliation mechanism against commercial competitors

The European Union (EU) Commission has announced its proposal for regulation, which includes the establishment of a trade retaliation mechanism that will enable the possibility of applying restrictive measures against the economic pressures of third countries.

According to the mechanism called ‘Anti-Coercion Instrument’, foreign countries that implement or threaten to implement measures affecting the trade or investments of the EU or its member states will be immediately intervened. If it is determined that economically coercive measures have been taken and negotiations on this issue do not resolve the problem, the mechanism will come into play.

In this context, the EU Commission will immediately implement various options such as customs duty, quota, import limitation, restriction of investments and services, and blocking of access to the EU markets of the country.

An economic measure to be put into effect by the EU can be lifted by a majority vote of the member states.
Currently, the EU does not have a legal framework to intervene against economic coercion.
After this stage, the approval of the European Parliament (EP) and member states is required for the mechanism to enter into force.

The EU’s practices such as sanctions or retaliation in economic matters can be taken unanimously by the member states. Because of this situation, each member state must be persuaded to accept counter-sanctions. However, the sanction decision takes a long time and is not possible in all cases.

While the opinion that the said mechanism can be used against countries like China that is alleged to impose economic impositions prevails, not all EU member states are friendly towards the mechanism. Some EU countries find the existing World Trade Organization (WTO) rules sufficient to resolve economic problems and conflicts.

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