The anti-coercion instrument that the European Commission is proposing for adoption this year coinciding with a crisis with China over its economic bullying of Lithuania is not only a risky institutional power transfer – it might end up being a damp squib.
To avert such crises and put the European Union in a position to better resolve them, the EU executive body should drum up an initiative to develop a structured, operational and inclusive China policy for the short term.
It is also high time to pave the ground for a serious conversation about moving to qualified voting majority in foreign policy in the mid-term. Contrary to perceptions, many member states and citizens are more open to the idea than many might think.
The EU’s anti-coercion move aims at responding to “a situation where a third country is seeking to pressure the union or a member state into making a particular policy choice by applying, or threatening to apply, measures affecting trade or investment against” them.
Problematic instrument to treat a suboptimal foreign policy set up
There are reasons to be alarmed at what this anti-coercion instrument says about the European Union as a union.
The fundamental flaw of the proposed instrument is that it is the result of another fundamental flaw in the way foreign policy is done in the EU and how the institutions currently work in the wake of existential geopolitical issues.
But when you add a flaw to a flaw, you don’t neutralise the flaw, you just create a bigger flaw.
We all know this: the EU’s geopolitical power is constrained by the constitutional reality of political fragmentation. Foreign policy remains the prerogative of member states and, when done at EU-level, is decided by unanimity – as per the sacro-sanct Treaties.
That’s why it fails so often.
The current doxa in and around Brussels, in federalist and eurosceptic circles alike, is that the EU’s treaties can’t be changed without creating an unmanageable political crisis around their ratification back in the member states. Moving foreign policy into QMV territory – as they say – is seen as simply taboo.
But there is a drawback to this setup. We are in a situation today where, when a big elephant comes crashing against the gates and uses its trop to uproot out and gobbles up the carrots, while kicking around the small animals on the farm because they did something that irritated Big Elephant, there is no structured mechanism to deal with this.
A tale from the EU animal farm
There is nobody to line up the ducks in a row to wield in self-defense their 27 arrows – or Kalashnikovs – together.
The animal farm’s response would ideally also involve a properly empowered and credible game keeper at the front who can first try to negotiate a peaceful retreat with the gate crasher. The big beast might be persuaded more easily when it sees the shine of the 27 aligned guns in the background.
The EU menagerie is not made of ducks only. There are a few big ostriches, which can afford to keep a bit calmer than the little ducks, some young and a bit reckless, whose little wings or bodies are more vulnerable under the bones of an elephant foot.
An angry elephant will also find it easier to fool around with the little birdies by, say, throwing them into the air with their trump than the bulkier and heavier ostriches. The ostriches have a way out: stick their heads in the sand and wait until the elephant retreats. As ostriches do, they don’t like to think ahead and might be in for some bad news at the sight of their habitat once they have taken their head out of the ground. But they can’t help being ostriches.
The anti-coercion instrument is clearly intended to get around this every-one-fends-for-themselves and herding-birds problem.
Sweeping powers to the milk maid
As proposed last December, the instrument would empower the European Commission under the guise of its fully federalised common commercial policy – as laid out in article 207 of the Treaty of the Functioning of the European Union – to unilaterally decide that the EU itself and/or one or several of its member states are being economically coerced.
The commission would then have almost full powers to enact potentially sweeping restrictions on trade by the country that is arm-twisting the EU or its member states through any form of trade or investment blockade.
The procedure by which this would be enacted resembles that adopted in anti-dumping cases. In order to oppose a measure put forward by the Commission, a qualified majority of member states would need to actively vote against it. So far it has been very hard for member states to oppose trade policy measures adopted under this ‘delegated acts’ procedure.
The idea behind this is clear: the intention is to give capitals and the European Parliament very little say in the whole process and raise the cost of a policy veto. The European Commission’s spin on this matter is predictable: of course we consult with member states, relevant stakeholders and the parliament, it says. LINK
In practice nobody knows exactly how the commission comes up with the kind of results and that lead it to slap a certain level of import duties of steel bolts from country X in Asia. It’s a black box. Why would it be different in a slippery hard-to-define case of coercion?
One can dismiss the steel bolts matter as technical, hence the comitology procedure adopted to expedited duties perfectly suitable. But is it suitable when it comes to responding to attempts at constraining sovereign decisions of member states by third countries? Shouldn’t this be way above the paygrade of a directorate-general for trade, however respectable?
To use our animal farm analogy: the planned anti-coercion legislation would give the milk maid full powers to decide on her own if the elephant is taking a step too in preying on the EU farm and gives her all the requisite powers, except brute force, to make it back off.
The powers given to the maid involve mainly allowing her to throw cabbages, pumpkins and valuable truffles at the big animal, perhaps also water-hose it a little. The chances that this convinces the big beast to head out the door and leave the ducklings alone are low. The farm for its part will be poorer in the end.
Ostrich policy: delegating foreign policy responsibility to common commercial policy
Article 207’s inroads into member state choices in matters related to foreign policy proper is not new. It started the day the EU came up with a common foreign investment screening mechanism in 2017 – at the behest of the big ostriches – pardon, member states – France, Germany and Italy.
Although the investment screening mechanism is an inter-governmental mechanism ruled by the consensus rule in its operation, its legal basis is Article 207.
For some reason member states did not find this legal shift in any way shocking. Only a few policy nerds like yours truly found this shift notable. But after all, the big guys had asked for it and over time most smaller ducklings have been persuaded it might be a good idea to screen some investments for security purposes and share thoughts about this with all other birds in the menagerie.
Also the way the investment instrument is designed is properly harmless – sorry, I meant it respects member state prerogatives in foreign policy. If an EU government absolutely wants some new generation telecommunications equipment from Company Z belonging to Elephant You Know Whom With Its Unknown Intentions and Spyware, nobody can stop it.
The anti-coercion instrument is a very different legislative power transfer.
“The Proposal gives the Commission regulatory superpowers, and this is so by design”, notes Sidley Austin’s Bregt Natens and Sven to Knop, with apologies to these high-flying lawyers for being dragged into an animal farm style story.
One can argue that procedural niceties such as political accountability and transparency should not stand in the way of creating a genuine deterrent and risking a veto by someone being bought off or bullied by the country one is trying to push back on.
One can also argue that niceties such as World Trade Organization rule-book compatibility of any measure taken under the instrument can be disregarded given the fundamentally lawless setup – economic coercion – we are in anyway.
The proposed instrument is, under that perspective, the best short-cut to line the ducks in a row with their rifles in their arms.
Deterrent or damp squib?
The anti coercion instrument’s aim is to deter elephants from considering crashing the gates by the very indication that there might be an economic nuclear weapon – of sorts – hidden away in a corner of a barn.
Indeed, the European Commission is not only a technocratic body: it understands politics only too well. And it knows one hard truth of ‘pure’ power politics: that only total uncertainty can be dissuasive.
“Deterrence here is ensured by the breadth of scope, both on triggers and on remedies and the nature of the underlying decision-making process,” deputy director-general for trade Denis Redonnet told members of the European Parliament only very recently.
Whereas the EU executive talks “deterrence”, there are curious elements in the draft proposal that undermine its very idea. It argues that it would abide by core principles of rule-of-law in enacting its measures, one of them being proportionality.
What does proportionality mean in deterrence?
What would a very hypothetical remedy action in the case of say, the ongoing Chinese blockage on Lithuanian exports look like? The trade at hand is ‘only’ a few hundred million Euros worth.
Would the EU seriously consider only trade retaliation against China over a few hundred euros worth of trade? What other damages would it take into consideration? That done to a few German or Scandinavian firms that can’t source in Lithuania anymore to export to China? That is also still rather small. Or would the Commission put a price tag on the very act of undermining the single market – which is what this Lithuania crisis is also about? And wouldn’t that price need to be very high indeed if this is about deterring a country like China?
If one is already disregarding fundamental principles of political accountability and international economic rule of law, then why even bother invoking proportionality? Because would elephant Donald Trump 2.0 care or elephant Xi Jinping mind a midget’s bite on their tough skin?
But then if you go nuclear, wouldn’t the Commission risk that phone call from Berlin and/or Paris and perhaps a few other ostriches saying we need to keep the peace and not throw out all our valuable farm produce?
Ostriches on the phone
Because here is the deeper matter.
With the way things currently work in matters related to Grand Geopolitics in Brussels, the anti-coercion instrument might end up being invoked against a mid-range power expressing annoyance at some environmental EU regulation that affects its tropical product exports by blocking, say, shipments of wine and spirits in customs. But that doesn’t coerce the EU and an anti-coercion move would only deepen the political crisis.
But the risk in this set up is that the big targets of this measure, namely China and the United States, would be spared.
This is because the current leadership Council and the Commission are largely in the hands of the big member states, with a bit of support of political party networks in other member states. This weakening, or member-state-secretariat-isation, of the commission is not a new trend but has reached new heights under the leadership of Ursula von der Leyen. The heads of Council – not least president we have currently have – are also chosen among people whose job they owe to a few big capitals. They are not making a stand against the latter when the higher common interest of the EU might warrant showing some guts in the name of all.
So, to go back to our EU animal farm take, the game keeper and the milk maid are basically the spokespersons of the ostriches.
Let’s be even clearer: has anyone watched closely how China policy is currently done in Brussels?
Do you remember those Leaders’ Meetings in 2020 involving only the presidents of the Council, the European Commission, of France and the Chancellor of Germany to meet their counterpart Xi Jinping? Who came up with those formats? Who approved them? Why this format? Which treaty clause was followed here.
Somewhat fresher on our minds are those calls by the new German Chancellor to Brussels last December that contributed to the Council not putting down one single line on the situation with Lithuania in its conclusions at the last summit of EU leaders just before Christmas.
Let’s not blame it all on Berlin.
Here is the Paris-based foreign affairs think tank IFRI’s Marc Julienne in Le Monde newspaper only very recently on France, loosely translated by yours truly: “Our China policy is blurred and inaudible (…) overtaken by events and not demanding enough. It still relies on economic and commercial engagement with Beijing, treating sensitive political questions behind the scenes or delegating them to Brussels.”
Julienne further: “Yet at the level of the EU, Chinese pressure on member states continues to grow. Such pressures require a common response and a stronger expression of intergovernmental solidarity, starting with the state that presides the Council” as France does now.
To its credit the French presidency– but mainly through voices such as foreign minister Le Drian and commerce minister Franck Riester – are pushing the anti-coercion instrument on the record as one among other responses to the de facto blockage of Lithuanian trade by China. But has Macron stuck his neck out with his counterpart Xi on this? No to my knowledge.
This is the type of national policy that happily delegates the dirty work to Brussels until trouble brews and a phone call from the Elysée or the chancellor’s office in Berlin lets the whole affair die out.
What’s the purpose of a non veto-able anti-coercion instrument when the move can be nipped in the bud higher up in the food chain through political channels and procedures that are not enshrined in the treaties?
This piece does not say the instrument should be opposed. It merely argues that under currently prevailing political realities it might end up being a damp squib. It might end up not being used – as is the commission’s stated intention. But this time it would be the wrong reasons as it would have strictly none of the intended deterrent effect.
Streamline China policy now
The only way the instrument could work is if it is part of a broader overhaul of how foreign policy, starting vis-à-vis China, is handled within the current power structures.
There is one obvious candidate which can be adopted quickly without needing treaty change and because it is already widely supported by the supposedly most conservative corners of the EU such as business and the European People’s Party.
In a 2020 policy paper BusinessEurope proposed that an “annual strategic dialogue on China between the EU, its Member States, the European business community, academia and other key stakeholders” be set up. “Inspiration could be drawn from the European Commission’s Task Force 50 on Brexit.”
The EPP for its part came up with a similar proposal in March 2021. “A crosscutting taskforce [on China] should be established within the European Institutions – modelled on the successful Brexit taskforce, which was instrumental in keeping member states united in their position”.
With politically such low-hanging fruit dangling in front of it, what on earth, one wonders, is it that stops the von der Leyen office from going ahead with such proposals and mobilise everyone relevant to that end?
And note: giving a little impetus to foreign affairs chief Borrell to rush the conclusion of the much-sough EEAS ‘strategic compass’ after having excluded him from all the important China affairs in the first years of the von der Leyen’s tenure won’t cut it. This wel-intentioned exercise already seems a bit passé. The EU needs to move to hands-on policy.
Harnessing such new mechanisms as proposed above might avert many a crisis with China in the future and help member states better understand each other’s foreign policies – because all of them have legitimate concerns and perspectives – and hopefully calibrate them better.
Ultimately we will need to go for treaty change and to qualified voting majority in foreign policy, especially when it comes to all these issues that overlap with economics – sanctions or economic coercion. This would immediately reduce the wear and tear involved in one big power bullying small member states and ignoring Brussels because this is, they say, a bilateral matter.
QMV in foreign policy might also reduce the risk of some member states going free-style in some international policy that could come at the cost of the rest of the EU because it calls for retaliation.
If the EU had an articulated China policy backed by qualified voting majority which involved some core principles on how to respect the EU’s One China policy whilst exerting its own and its member states’ right to engage freely at technical, economic, cultural and human level with Taiwan, we wouldn’t probably be in this situation with Lithuania.
The ducks would be better aligned behind the game keeper and that anti-coercion instrument actually be more credible as a deterrent. The ostriches for their part might be less afraid of keeping their heads up and staring back the elephant.
Contrary to conventional wisdom, public opinion is not as reticent to the idea of centralising foreign policy as one might think. And more member states than one thinks are open to the notion of moving to qualified majority voting in this field. The idea is also enshrined in the new German coalition contract.
So why not just start moving?
