EU Anti-Coercion Instrument
A 2023 regulation allowing the EU to retaliate, through trade, financial or public procurement restrictions, against a third country that pressures it or a member state through economic measures.
A state may seek to change another's policy without using force, by blocking its exports, boycotting its companies or delaying its customs clearance. In 2021, after a representative office bearing the name of Taiwan opened in Vilnius, Lithuania saw its exports to China collapse, and companies in other member states were pressed to remove Lithuanian components from their products. The Union had no suitable tool. Regulation (EU) 2023/2675, in force since late December 2023, creates one. The Commission examines whether a third country is exercising economic coercion; the Council determines it by qualified majority; the Union first engages in dialogue, then may adopt response measures: tariffs, import or export restrictions, limits on access to public procurement, restrictions on services, including financial services, or on intellectual property. The instrument's first function is deterrence: its mere existence should discourage pressure. For insurance, it adds a layer to the political risk of trade. A European company may be caught between a third country's coercion and the Union's response, and see its flows or payments blocked on either side, which bears on trade credit and transfer risk covers.
Textbook case: a third country blocks for months the wine imports of a member state after a diplomatic decision it dislikes. A Bordeaux merchant sees its receivables on importers in that country become uncollectable; its credit insurer examines whether the blockade falls under the political risk covered by its policy.
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