Openness to multilateralism and international cooperation

The constitutional commitment to multilateralism and international cooperation is the first element that we identify as feeding into the concept of openness in EU external relations. Article 21 TEU expects the EU to promote international cooperation by: (1) developing relations and building partnerships with third countries;Footnote ²⁰ and by (2) seeking ‘multilateral solutions to common problems’, through the development of relations and partnerships with international, regional or global organisations.Footnote ²¹ The objective is to create ‘an international system based on stronger multilateral cooperation’, including within the framework of international organisations, such as the United Nations.Footnote ²² In addition, the catalogue of objectives of the EU’s external action are to be pursued and achieved through ‘a high degree of cooperation’.Footnote ²³ Taken together, these articles reveal a constitutional preference for a multilateral approach.^{Footnote 24} The EU being a creature of multilateralism, openness to multilateralism and international cooperation may be viewed as existential to the EU. Indeed, Article 21(1) TEU provides that the EU’s action on the international scene ‘shall be guided by the principles which have inspired its own creation’.Footnote ²⁵ Historically, multilateral action has been the preferred mode of governance for the EU’s foreign policy and ‘a common thread’ of the EU’s external action.^{Footnote 26} Van Vooren and Wessel even speak of a ‘methodological imperative’ incumbent upon the EU to pursue its external action through a multilateral approach based on the rule of law.^{Footnote 27} To the extent that pursuing multilateralism is not internationally feasible,Footnote ²⁸ pursuing bilateralism may be seen as a second best option and as a form of cooperation falling in the understanding of openness, albeit not a norm explicitly mentioned in the Treaties.

The constitutional commitment to multilateralism and international cooperation is, however, not absolute. It is possible to identify some implicit restrictions to this mandate which fall outside our understanding of openness. First, the Treaties do not expressly ban unilateralism, which therefore escapes any positive or negative connotation.^{Footnote 29} The scope of the EU’s Common Commercial Policy in fact includes measures to protect trade, such as anti-dumping and countervailing measures, which are unilateral in nature.Footnote ³⁰ Second, there is no hierarchy amongst different EU foreign policy objectives. The EU is expected to pursue coherence in its external action, which requires a careful balancing act when objectives are in conflict.Footnote ³¹ In some instances, such a balancing act may reveal that limitations to the objectives of multilateral and international cooperation are justified in light of the benefits gained from the unilateral pursuit of a different objective (e.g., security or environmental protection). Third, Article 21(1) TEU provides that relations and partnerships should be built with countries and organisations that ‘share the principles’ laid down in the first sentence of the article, inter alia, human rights, democracy, and the rule of law. In doing so, the Treaties themselves qualify the objective to cooperate multilaterally and internationally.

On balance, Article 21 TEU underpins the EU’s commitment to international cooperation and multilateralism, which is considered here as a constitutional norm feeding into the concept of openness in EU foreign policy. Importantly, despite a clear constitutional preference for multilateralism and international cooperation over unilateralism, the Treaties do not ban unilateralism. The Treaties leave broad discretion to the EU policy-makers to defect from the constitutional commitment to international cooperation and multilateralism.

Openness to trade liberalisation

The commitment to trade liberalisation is another constitutional feature that feeds into the concept of ‘openness’. ^{Footnote 32} Trade openness, or openness to trade, now finds its constitutional foundations in EU primary law. Article 21(2)(e) TEU prescribes that the EU should ‘encourage the integration of all countries into the world economy, including through the progressive abolition of restrictions on international trade’. This is echoed in Article 206 TFEU, which includes a commitment to contribute to the development of world trade, the (progressive) removal of restrictions on international trade and the lowering of customs and other barriers.^{Footnote 33} While previous Treaties formulated this objective in aspirational language, some scholars have gone as far as arguing that the Treaty of Lisbon effectively elevates the pursuance of trade liberalisation to an obligation.^{Footnote 34} Moreover, ‘free and fair trade’ features among the values and interests listed in Article 3(5) TEU, which the EU is expected to uphold and promote in its relations with the wider world. Finally, as per Article 21(1) TEU, the EU should develop relations and build partnerships with third countries – something which the EU has done over time chiefly (albeit not only) through trade and association agreements and trade preferences schemes. As Larik observes, international trade liberalisation is not usually found in national constitutions and is unique to the EU: trade liberalisation is one of the first objectives to be codified in founding Treaties, reflecting the historical origins of the EU as an economic project.Footnote ³⁵ The Treaty of Lisbon reaffirms and elevates trade openness as a general objective for the EU’s external action.

Yet, the Treaty of Lisbon presents trade liberalisation not only as an end in itself but also as a means of achieving other non-economic goals, through measures promoting free trade as well as measures limiting trade.Footnote ³⁶ Indeed, openness to trade liberalisation is once again not an absolute objective. As put by Cremona, the objective of trade liberalisation is subject to institutional policy choices.Footnote ³⁷ Unlike multilateralism and international cooperation (where limitations were rather implicit), the Treaties expressly restrict the objective of trade liberalisation. First, Article 206 TFEU does not call for a swift and full but a ‘progressive’ removal of barriers to trade.^{Footnote 38} The extent to which the ‘progressive’ liberalisation of trade barriers requires the reduction of tariff and trade barriers – and in turn prohibits the adoption of instruments that establish such barriers – may thus be debated.Footnote ³⁹ Second, and most importantly, the degree of trade liberalisation ought to be balanced against other values.^{Footnote 40} Article 205 TFEU sets the legal framework for this balancing act. It provides that, on the international scene, the Union shall pursue the objectives of the Union’s external action laid down in the TEU and be guided by its principles. Article 207(1) TFEU reiterates that external trade policy should be conducted ‘in the context of the principles and objectives of the Union’s external action’.^{Footnote 41} According to settled case law, Article 207(1) TFEU cannot be interpreted as prohibiting the EU from enacting any measure liable to affect trade with non-member countries.Footnote ⁴² The objective of contributing to the progressive abolition of restrictions on international trade can thus not compel the institutions to liberalise imports from non-member countries where to do so would be contrary to the interests of the Union.Footnote ⁴³ Opinion 2/15 recently confirmed the constitutional mandate of EU policy-makers to integrate sustainability into external trade policy.^{Footnote 44} This reasoning arguably applies to other values stipulated in Articles 3(5) and 21 TEU, including security.^{Footnote 45} Third, the Treaties do not ban protectionism, at least when understood as the (re-)establishment of barriers to trade.Footnote ⁴⁶ As a result, the integration of constitutional non-trade objectives (e.g. sustainability, security) into the EU’s trade policy may justify a restriction of the objective to (progressively) liberalise trade set out in Article 206 TFEU.

Overall, while it is possible to identify a clear constitutional preference of balanced trade liberalisation over protectionism, the Treaties provide for wide discretion to restrict the objective of trade liberalisation in order to pursue non-trade values.

Openness to international law

Finally, we find openness in EU external relations to also be connected with the duty to respect international law. While this is a separate principle on its own, we consider it as qualifying and giving further meaning to the concept of openness emerging from the treaty provisions on EU external action. According to Article 21 TEU, the Union’s external action shall be guided by ‘respect for the principles of the United Nations Charter and international law’ (emphasis added) (Article 21(1) TEU) and aim at the consolidation and support of ‘the principles of international law’ (Article 21(2)(b) TEU). This is in addition to Article 3(5) TEU, whereby the EU shall ‘contribute’ to ‘the strict observance and the development of international law, including respect for the principles of the United Nations Charter’.^{Footnote 47} We argue that Articles 21 and 3(5) TEU reflect a constitutional mandate for the EU to be ‘open’ to international law.

We understand ‘openness to international law’ as ‘compliance’ of EU foreign policy instruments with international law. In this sense, we depart from the legal literature on the relationship between EU law and international law that has studied ‘openness to international law’ by discussing the extent to which the European Court of Justice is receptive to it, ready to apply it to resolve disputes, incorporate it into the EU legal order, or give direct effect to it within the EU legal order.^{Footnote 48}

In the context of the EU’s external action, Article 3(5) TEU provides an obligation to ‘comply’ with international law. This understanding derives not only from Article 21 TEU, but also from Article 216(2) TFEU, according to which Treaties concluded by the EU are binding on the EU institutions and its Member States. As remarked by Chamon, Wessel and Kassoti, and Bosse-Platière, Article 3(5) TEU appears to introduce an internal constitutional justification for the EU’s compliance with international law, as opposed to what might be perceived as an external obligation imposed by international law onto the EU, foreign to the EU’s own constitutional charter.^{Footnote 49} And while pre-Lisbon case law already maintained that the EU should act in line with international law,^{Footnote 50} in Air Transport Association of America, the Court expressly relied on Articles 3(5) and 21(1) TEU to affirm that the EU, when adopting an act, ‘is bound to observe international law in its entirety, including customary international law, which is binding upon the institutions of the European Union’.^{Footnote 51} Although the normative force of Article 3(5) TEU remains contested,Footnote ⁵² the provision stipulates as a minimum – and irrespective of its ‘legal bite’ – a mandate not to breach international law.

At the same time, Article 3(5) TEU does not appear to forbid the pursuance of other EU values that may come at the expense of ‘strict’ observance of international law. As the Kadi saga has famously shown, the EU’s compliance with international law can be trumped by other constitutional principles and objectives.^{Footnote 53} Article 3(5) TEU contains a number of values of the EU’s external action whose pursuance may be at odds with the strict observance of international law. This was also the case in the above-mentioned Air Transport case, which involved a trade-off between compliance with international law and pursuance of the objective of environmental protection.^{Footnote 54} This line of case law, however, is relatively limited, suggesting that non-compliance with international law will only be allowed when fundamental EU values are at stake, e.g. breaches of fundamental rights. Unlike in the cases of unilateralism and protectionism, there appears to be a lot less room for balancing. And while the Treaties set out (more or less explicit) restrictions on openness to trade liberalisation and multilateralism, the mandate to ‘be open to international law’ in EU external relations is backed by a clear obligation, in Article 216(2) TFEU, requiring the EU to comply with the agreements it enters into.

To conclude, EU foreign policy instruments that breach international law not only contravene international law but also breach an EU constitutional norm which we identified as contributing to the concept of openness in EU external relations, namely Article 3(5) TEU, read in conjunction with Article 216(2) TFEU. As a result, EU policy instruments that are likely in breach of international law are considered here as falling short of reflecting alleged policy aims of openness.

Decline of multilateralism and international rules-based cooperation

The previous section showed that the Treaties convey a strong methodological preference to tackle global problems multilaterally.Footnote ⁵⁵ However, in the field of trade, the viability and efficacy of multilateralism has been dwindling for many years. There has not been a significant reform of the WTO since 1994. In addition, its ‘crown jewel’, the WTO Appellate Body, has been dysfunctional since 2016 with the USA blocking appointments of new Appellate Body members.Footnote ⁵⁶ The EU has been an active promoter of the Multiparty Interim Appeal Arbitration Arrangement that may be used as an alternative means to resolve WTO disputes that are appealed by a member in the absence of a functioning Appellate Body.Footnote ⁵⁷

Despite its declared commitment towards multilateral trade, the EU has not relied on multilateralism as the main form of trade governance for over a decade. In response to the lack of reform progress in the WTO, the EU adopted a bilateral trade agenda in 2006. The agenda promoted a strategic use of bilateralism, especially with Asian trading partners.Footnote ⁵⁸ Although the Treaties consider bilateralism as the ‘second best option’ after multilateralism, the EU’s focus on forming rules-based partnerships with third countries remains reflective of its objective to promote international cooperation. Since 2006, the EU has signed and/or concluded trade agreements with Korea, the Andean countries, Ukraine, Moldova, Georgia, Canada, Japan, Singapore, Vietnam, the UK, and New Zealand. Bilateral trade negotiations were recently concluded with Chile and are currently ongoing with Australia, Indonesia, and India.Footnote ⁵⁹ But the increasing geopolitical tensions have had adverse effects on the EU’s bilateral trade policy. The European Parliament voted to suspend the ratification of the Comprehensive Agreement on Investment with China,Footnote ⁶⁰ Austria rejected the new EU-Mercosur trade agreement,Footnote ⁶¹ and EU-US trade relations have been soaring since the death of Transatlantic Trade and Investment Partnership. It is improbable that the new Trade and Technology Council will revive EU-US trade relations as it is widely viewed as a declaratory tool incapable of triggering substantive rules-based outcomes.Footnote ⁶²

Overall, and despite some cooperative efforts, the Commission’s political efforts to enhance the EU’s global trade agenda are thus slowing. At the same time, one can observe an unprecedented rise of unilateralism in EU trade policy. As a result, the depiction of the EU as the ‘lone ranger of the global legal order’^{Footnote 63} is arguable no longer accurate, at least not in the field of trade.

Rise of unilateralism

The rise of geopolitical tensions has resulted in a move away from the rules-based trading system towards a power-based trade environment.^{Footnote 64} In its 2021 Trade Policy Review, the Commission noted that the increasing geopolitical tensions imply ‘growing unilateralism, with the consequent disruption or bypassing of multilateral institutions’.Footnote ⁶⁵ Considering the constitutional mandate to facilitate openness towards multilateralism and international cooperation, one may have expected the EU to counteract the trend towards unilateralism by placing a clear focus on reinvigorating multilateral and expanding bilateral trade relations. At the very least, the ‘methodological imperative’Footnote ⁶⁶ to pursue external action through a multilateral approach based on the rule of law would suggest an open and active opposition by the EU to any developments that ‘disrupt’ or ‘bypass’ rules-based international legal orders. Yet, the adoption of the EU’s Trade Policy Review in 2021 had the opposite effect: the EU has seemingly accepted the global trend away from multilateralism and international cooperation and focused on setting-up a unilateral toolbox in various policy fields, including trade. Table 1 classifies unilateral EU trade policy instruments that have been announced and/or adopted since 2021 in pursuit of open strategic autonomy.

Table 1. Unilateral EU trade policy instruments designed in pursuit of open strategic autonomy

Table 1 shows that the EU’s latest unilateral trade instruments fulfil three different goals. A first group of instruments seeks to restore reciprocity in international trade relations. A key instrument in this category is the recently adopted International Procurement Instrument, which aims to limit foreign companies’ access to the EU procurement market if their respective governments do not offer reciprocal market access to EU tenders.Footnote ⁶⁷ It empowers the Commission to investigate and confirm a market imbalance and to adopt price adjustment measures against tenders from the targeted country, or to exclude such tenders from the EU procurement market altogether.Footnote ⁶⁸ One could argue that the International Procurement Instrument pursues openness by pressing third states to reduce market access barriers regarding government procurement. As the Instrument ultimately enables the Commission to reduce access to the EU procurement market for ‘non-equivalent’ third states, one may, however, also make the opposite claim. Indeed, the International Procurement Instrument was initially rejected by the Council because it was viewed as being overly protectionist.Footnote ⁶⁹ A second unilateral EU instrument that seeks to restore international reciprocity is the Foreign Subsidies Regulation.Footnote ⁷⁰ The Regulation empowers the Commission to, first, determine the existence of a foreign subsidy and its distortive effect on the internal market, and, second, to impose balancing and redressive measures.Footnote ⁷¹

A second group of EU unilateral instruments aims to use access to the internal market as a lever for achieving global sustainability goals. Despite being based on ‘internal’ legal bases, such as Article 114 TFEU (internal market) or Article 192 TFEU (environment), these instruments have a direct effect on global supply chains and trading flows. The Carbon Border Adjustment Mechanism is perhaps the most well-known example in this second category of unilateral instruments.Footnote ⁷² This mechanism aims to combat carbon leakage in the EU’s Emission Trading System by requiring EU importers to acquire allowances for their imported goods corresponding to the price they would have paid if the good had been produced in the EU.Footnote ⁷³ The proposed Corporate Sustainability Due Diligence Directive similarly seeks to manage manufacturing conditions in third countries without regulating beyond EU borders.Footnote ⁷⁴ It requires large EU companies to conduct human rights and environmental due diligence along their supply chains.Footnote ⁷⁵ Due diligence is also at the heart of the Deforestation Regulation.Footnote ⁷⁶ With a view to minimising the EU’s contribution to global deforestation and, ultimately, greenhouse gas emissions, it lays down mandatory due diligence standards on all operators that place forest-risk commodities on the EU internal market (specifically cattle, cocoa, coffee, oil palm, rubber, soya, and wood).Footnote ⁷⁷

The last group of EU unilateral instruments aims at preserving EU security through trade. Since 2021, the EU has planned or adopted no less than five trade-security instruments on the basis of Article 207(2) TFEU. The first trade-security instrument is the Revised Trade Enforcement Regulation.Footnote ⁷⁸ The Regulation is a direct response the US-driven paralysis of the WTO Appellate Body in 2019.Footnote ⁷⁹ It empowers the EU to adopt countermeasures if a trading partner disables either WTO or FTA dispute settlement proceedings.Footnote ⁸⁰ It is here labelled as a security instrument because it is essentially about defending the EU’s interests vis-à-vis third states, most notably the United States, by means of stricter enforcement rules.Footnote ⁸¹ The second unilateral ‘trade-security’ instrument is the Foreign Direct Investment Screening Mechanism.Footnote ⁸² Although this mechanism became operational before the adoption of the 2021 Trade Policy Review, it has been expressly framed as an instrument in pursuit of open strategic autonomy.Footnote ⁸³ It establishes a coordination mechanism between the EU and the Member States for screening foreign investments that are likely to affect public security and public order. Footnote ⁸⁴ A third unilateral trade-security instrument is the recently revised Export Control Regulation, which governs the export of dual-use goods, software, and technology.Footnote ⁸⁵ A fourth trade-security instrument is the Anti-Coercion Instrument.Footnote ⁸⁶ This instrument seeks to equip the EU with the capacity to react to economic coercion of the EU and/or its Member States, including through countermeasures.Footnote ⁸⁷ A fifth – and so far final – trade-security instrument is the planned revision of the EU Blocking Statute.Footnote ⁸⁸ The proposed Revised Blocking Statute may be viewed as the flipside of the Anti-Coercion Instrument as it aims to counter ‘the effects of the unlawful extra-territorial application of third-country unilateral sanctions to EU individuals and entities’.Footnote ⁸⁹

Despite their different aims and functions, the EU’s recent unilateral instruments approach multilateralism and international cooperation in a very similar fashion. Several instruments are a direct response to the failure of multilateralism, and especially the lack of institutional and substantive WTO reform. This is, inter alia, the case for the Revised Trade Enforcement Regulation, the Foreign Subsidies Regulation, and the Carbon Border Adjustment Mechanism. Despite addressing global problems unilaterally and not multilaterally,Footnote ⁹⁰ most instruments recall the objective to promote international cooperation in their first recitals.Footnote ⁹¹ But that ambition is scarcely reflected in substance. Most instruments do not legally require the EU to cooperate internationally. Some contain best effort clauses, leaving the intention and degree of cooperation at the discretion of the EU institutions and/or the Member States. For example, the Anti-Coercion Instrument stipulates that the Commission ‘shall provide adequate opportunity for consultations’ with the concerned third state, ‘shall engage in such consultations expeditiously’ and ‘explore options’ with the third state, provided that the latter ‘enters into consultations with the Union in good faith’.Footnote ⁹² While the Commission shall raise the matter in relevant international fora, it is not obliged to exhaust available international remedies, including international dispute settlement, before imposing unilateral trade sanctions against the targeted country. Similarly, the Export Control Regulation stipulates that the Commission and the Member States shall ‘where appropriate’ maintain dialogue, that ‘may’ lead to the negotiation of agreements on the mutual recognition of export control standards for dual used goods.Footnote ⁹³ The strongest commitments to cooperation are contained in the Deforestation Regulation and the International Procurement Instrument. The former requires the Commission and interested Member States to ‘engage in a coordinated approach with producer countries … concerned by this Regulation … through existing and future partnerships, and other relevant cooperation mechanisms to jointly address deforestation and forest degradation’ and to ‘engage in international bilateral and multilateral discussion on policies and actions to halt deforestation’.Footnote ⁹⁴ The Commission will ‘take account’ of such partnerships and their implementation by third countries as part of the benchmarking exercise under Article 29 of the Regulation.Footnote ⁹⁵ In the benchmarking process, the Commission shall notify the concerned country and invite it to submit a response.Footnote ⁹⁶ The benchmarking itself, however, remains a unilateral exercise. The latter requires the Commission to invite the targeted third country to submit observations and to enter into bilateral consultations.Footnote ⁹⁷ Yet, it remains fully up to the Commission to suspend its investigation, even where the third country has taken satisfactorily corrective actions.Footnote ⁹⁸

The emergence of numerous unilateral trade instruments mainly equipped with best-effort clauses on international cooperation arguably mark a directional change in EU trade policy away from ‘the common thread’ of multilateralismFootnote ⁹⁹ and towards autonomous external action. That autonomous action is also strategic. Few instruments were designed as a response to powerful geopolitical players, such as the US and China (e.g. the Revised Trade Enforcement Regulation, the International Procurement Instrument or the Anti-Coercion Instrument). Moreover, most instruments expressly stipulate that the EU institutions may only resort to unilateral countermeasures if it is ‘in the interests of the European Union’.Footnote ¹⁰⁰ The ‘trade-sustainability’ instruments (second category) may be viewed as exceptions. They were not, or at least not mainly, designed in response to a global player but in response to a global problem, most notably climate change. They do also not tie an EU response, e.g. financial penalties, to the ‘interest’ of the EU and/or its Member States. And the Deforestation Regulation shows that the field of trade-sustainability might open up more avenues for encouraging multilateral and international cooperation through unilateral action, albeit then, largely, on EU terms. In this regard, the ‘trade-sustainability’ instruments are ‘strategic’ in nature, as they essentially seek to ‘shape international standards’ in line with EU (constitutional) norms.Footnote ¹⁰¹

Overall, the EU’s new unilateral trade instruments thus pursue EU strategic interests autonomously, at the expense of openness towards multilateralism and international cooperation. The claim of EU policymakers that ‘strategic autonomy’ and ‘openness’ are mutually reinforcing paradigms can therefore not be observed here. In light of the constitutional preference for multilateralism and international cooperation over unilateralism, one could have – at the very least – expected equal emphasis on ‘openness’ and ‘autonomy’ in EU trade practice. By contrast, we observe a dwindling focus on (re-)building international trade agreements, on the one hand, and the emergence of a unilateral trade strategy that does not require the parallel pursuit (let alone exhaustion) of international remedies, on the other. As was argued in the previous section, the Treaties leave broad room to balance the objectives of multilateralism and international cooperation against other constitutional objectives, in particular sustainability.Footnote ¹⁰² Therefore, the directional change towards an autonomous and/or strategic trade policy as such does not breach primary law. The intensity with which the EU pursues its autonomous trade agenda is nevertheless striking, especially when considering the constitutional preference for multilateralism and international cooperation that seemingly informed the EU policy-makers’ declared intention to design a trade strategy in pursuit of ‘open’ strategic autonomy in the first place.

Compliance with international law

As stated above, public international law does not establish a right for states to be free of economic coercion.Footnote ¹¹⁴ There is a more general prohibition on coercion contained in the customary law principle of non-intervention.Footnote ¹¹⁵ The 1970 UN General Assembly Resolution on Friendly Relations stipulated that various forms of coercion may violate the principle of non-intervention, including economic coercion.Footnote ¹¹⁶ In its famous Nicaragua judgment, the International Court of Justice appeared to confirm that the definition of intervention includes methods of coercion other than the ‘particularly obvious’ one, i.e. military force.Footnote ¹¹⁷ The Court, however, ultimately concluded that the trade embargo imposed by the US on Nicaragua did not breach the principle of non-intervention. Methods of economic coercion hence do not automatically breach customary international law: they must be evaluated on a case-by-case basis, and there is a high threshold for economic methods of coercion to qualify as a wrongful intervention.Footnote ¹¹⁸ If that threshold is met, the affected state may, inter alia, respond to the coercive act with countermeasures, in accordance with Article 49 ff. of the International Law Commission’s Draft Articles on State Responsibility (ILC Articles).Footnote ¹¹⁹

The Anti-Coercion instrument posits that economic coercion is a violation of international law. Pursuant to the Regulation,

The Regulation further states that the Commission, when assessing an alleged anti-coercive measure, shall take certain criteria ‘into account’Footnote ¹²¹ (including e.g. intensity, duration, magnitude etc.) without, however, establishing a qualitative (e.g. ‘long’ duration, ‘severe’ damage etc.) or a quantitative (e.g. minimum duration, minimum damage etc.) threshold for economic methods of coercion. The definition of economic coercion under the Anti-Coercion Instrument is thus wider than the definition of economic coercion as wrongful intervention under public international law. There is hence a threat that the EU will adopt countermeasures under its new Anti-Coercion Instrument against third state measures that do not qualify as wrongful intervention in public international law, thereby breaching the latter. For example, the Commission qualified as economic coercion a ‘silent’ Indonesian import block of alcoholic spirits that only lasted for about a year, encompassed a small portion of EU imports, and caused merely €5.9 million in damage.Footnote ¹²² An import ban of such a low magnitude apparently does not constitute a ‘wrongful intervention’ under public international law, even if one were to assume that international law has evolved since the 1986 Nicaragua judgment.Footnote ¹²³

In view of the explicit mandate to only take action consistent with international law enshrined in Article 1(3),(4) of the  Regulation, one may wonder whether the EU could in practice adopt countermeasures in cases such as the ‘silent’ Indonesian import ban. Given that Article 1(3) in particular does not further specify how and when compliance with international law is reached, it appears unlikely that the provision will act as a ‘final frontier’, preventing the adoption of countermeasures in cases that fall within the Regulation’s scope of application (Article 2 of the Anti-Coercion Instrument). In the absence of more precise criteria that ensure that the application of the Anti-Coercion Instrument is consistent with international law, such as precise qualitative and/or quantitative criteria setting out a high threshold for classifying economic measures as coercion, the Instrument could be used in instances that do not constitute a wrongful intervention, which would breach international law.

Compliance with WTO law

Even if the third state’s act qualifies as economic coercion under international law, the recourse to unilateral countermeasures by the EU could raise concerns under WTO law. If the coercive act in question (also) breaches WTO law, it could be argued that the EU must launch a dispute before the WTO judiciary before resorting to unilateral (counter)measures. The WTO Dispute Settlement Understanding constitutes lex specialis in relation to the general international law provisions on countermeasures (Article 55 ILC Articles). Article 23.1 of the Dispute Settlement Understanding stipulates that disputes falling within the ambit of the WTO Agreements can only be settled in accordance with the rules and procedures stipulated in the Dispute Settlement Understanding. The panels in US–Shrimp and Canada–Aircraft Credits and Guarantees underlined that Article 23.1 of the Dispute Settlement Understanding ‘stresses the primacy of the multilateral system and rejects unilateralism as a substitute for the procedures foreseen in [the Dispute Settlement Understanding].’Footnote ¹²⁴ The procedures foreseen in the Dispute Settlement Understanding furthermore require the authorisation of countermeasures by the Dispute Settlement Body (Article 23(2)(c) Dispute Settlement Understanding). The panel in US–Certain EC Products underlined that ‘Article 23.2(c) prohibits any suspensions of concessions or other obligations …, prior to a relevant [Dispute Settlement Body] authorization’.Footnote ¹²⁵ The recently launched WTO disputes by Australia and Canada illustrate that the existing multilateral structures can be used to respond to alleged economic coercion.Footnote ¹²⁶ That belief appears to be shared by the EU: in December 2022, the EU requested two WTO panels against China, essentially alleging that China has applied ‘discriminatory and coercive measures’Footnote ¹²⁷ against Lithuanian exports as a response to Lithuania’s deepened ties with Taiwan.Footnote ¹²⁸

In the future, the EU may simply rely on the Anti-Coercion Instrument without (first) using the existing multilateral structures to respond to alleged economic coercion. Despite being labelled as a measure of last resort, the Anti-Coercion Instrument does not require the EU to exhaust available multilateral and international remedies before resorting to unilateral countermeasures.Footnote ¹²⁹ Recital 12 of the preamble of the Regulation merely specifies that the EU shall use WTO dispute settlement ‘where appropriate’. It is also unclear (and arguably unlikely) that the aforementioned Article 1(4) of the Regulation, which stipulates that the Anti-Coercion Instrument applies ‘without prejudice’ to inter alia the WTO Agreements, in practice means that the EU will generally exhaust the remedies available to it under WTO law. According to the Commission, WTO disputes only deal with the WTO-inconsistency of the matter and not with the separate infringement of customary international law that lies in the coercive act and intention.Footnote ¹³⁰ The Anti-Coercion Instrument has thus been designed on the premise that methods of economic coercion, and the responses thereto, partially fall outside the scope of WTO law. Against this background, it is likely that the EU will not exhaust multilateral remedies before triggering the Anti-Coercion Instrument and that, as a consequence, countermeasures adopted under the Anti-Coercion Instrument will not be authorised by the Dispute Settlement Body. In a subsequent case on the legality of EU countermeasures adopted without Dispute Settlement Body authorisation, the EU may not be able to rely on the ILC Articles as a justification. WTO panels and the Appellate Body are reticent to accept legal grounds other than the ones expressly stipulated in the WTO Agreements as lawful justifications and are hostile to unilateral countermeasures adopted outside the framework of the Dispute Settlement Understanding.Footnote ¹³¹

In sum, the adoption of countermeasures under the Anti-Coercion Instrument is thus likely to clash with WTO law by: (1) circumventing the WTO dispute settlement process; and/or (2) justifying such measures on grounds other than those specified in the WTO Agreements. One may once again ask whether the requirement to act consistently with international law (Article 1(3) of the Regulation), to apply the Regulation ‘without prejudice’ to the WTO Agreements (Article 1(4) of the Regulation), or to take international legal criteria into account when designing countermeasures (Article  11(2)(h) of the Regulation), would ensure that countermeasures will only be adopted within, and thus be compliant with, the framework of WTO law. Given that the Regulation has apparently been designed on the premise that methods of economic coercion partially fall outside the scope of WTO law, and that WTO-inconsistent responses can be justified on grounds other than those foreseen in WTO law, it is, however, unlikely that the EU will in fact exhaust multilateral remedies before adopting countermeasures. Waiting for the multilateral system to ‘bite’ would also question why a unilateral response mechanism is needed in the first place.  It is therefore likely that the EU will eventually have to defend its (counter-)measures before the WTO judiciary.