REGULATORY SCRUTINY BOARD OPINION Proposal for a Regulation of the European Parliament and of the Council on the protection of the Union and its Member States from economic coercion by third countries

EUROPEAN COMMISSION
19/10/2021
SEC(2021) 418
REGULATORY SCRUTINY BOARD OPINION
Proposal for a Regulation of the European Parliament and of the
Council on the protection of the Union and its Member States from
economic coercion by third countries
COM(2021) 775
SWD(2021) 371
SWD(2021) 372
Offentligt
KOM (2021) 0775 - SEK-dokument
Europaudvalget 2021
________________________________
This opinion concerns a draft impact assessment which may differ from the final version.
Commission européenne, B-1049 Bruxelles - Belgium. Office: BERL 08/010. E-mail: regulatory-scrutiny-board@ec.europa.eu
EUROPEAN COMMISSION
Regulatory Scrutiny Board
Brussels,
RSB
Opinion
Title: Impact assessment / Instrument to deter and counteract coercive actions by third
countries
Overall opinion: POSITIVE WITH RESERVATIONS
(A) Policy context
Trade policy operates in an increasingly challenging geo-political context. Rising global
tensions, unilateral actions and coercive measures mean, that trade policy is increasingly
being ‘weaponised’.
In order to increase the resilience of the EU economy in this context, this initiative
addresses economic coercion from third countries. Economic coercion happens, when third
countries use economic/trade measures to assert pressure on the EU’s or its Member
States’ legitimate policymaking. This report considers how to defer such economic
coercion, to de-escalate it, discontinue coercive measures, and if that does not work,
counteract it.
(B) Summary of findings
The Board notes the useful additional information provided in advance of the
meeting and commitments to make changes to the report.
However, the report still contains significant shortcomings. The Board gives a
positive opinion with reservations because it expects the DG to rectify the following
aspects:
(1) The report does not explain well how coercion relates to international law.
(2) The report does not sufficiently explain the articulation with the Blocking Statute
and other existing instruments and legislation.
(3) The report does not present policy choices completely and adequately, nor does it
analyse sufficiently their efficiency and effectiveness.
(4) The report is not sufficiently clear about triggers, conditions and criteria for
launching specific actions under the mechanism.
2
(C) What to improve
(1) The report should explain better that coercion is a breach of customary international
law, which is not covered by international treaties and their settlement mechanisms. It
should clarify that the EU has never issued any retaliatory measures against coercion
because it lacks the legal means. It should explain that the EU is an exception in not having
anti-coercive power.
(2) The report should more systematically present evidence supporting the claim that the
problem is significant and increasing.
(3) The report should explain the articulation with overlapping instruments such as the EU
Blocking Statute and other existing instruments and legislation that could be used to
dissuade and counter coercion. The report should highlight the gap that this instrument is
designed to fill and how coherence will be ensured. The options should clarify how this
new instrument would interact with the EU Blocking Statute on extra-territioral sanctions.
If there are several possible approaches, the report should present and analyse these.
(4) The report should explain, which conditions and criteria will have to be fulfilled to
trigger the launch of an anti coercion case. The options should reflect any political choices
that need to be made in this context. The report should also better explain the process
under which a specific anti-coercion action would be adopted and how efficient decision-
making would be ensured.
(5) Policy options should be accompanied with the best possible evidence of their
effectiveness and efficiency. The comparison of options should better take into account the
likely differences in cost between the options.
(6) The report should be more precise on the required legal base for the actions taken.
The Board notes the estimated costs and benefits of the preferred option(s) in this
initiative, as summarised in the attached quantification tables.
Some more technical comments have been sent directly to the author DG.
(D) Conclusion
The DG must revise the report in accordance with the Board’s findings before
launching the interservice consultation.
If there are any changes in the choice or design of the preferred option in the final
version of the report, the DG may need to further adjust the attached quantification
tables to reflect this.
Full title Instrument to deter and counteract coercive actions by third
countries
Reference number PLAN/2020/9688
Submitted to RSB on 29 August 2021
Date of RSB meeting 22 September 2021
3
ANNEX: Quantification tables extracted from the draft impact assessment report
The following tables contain information on the costs and benefits of the initiative on
which the Board has given its opinion, as presented above.
If the draft report has been revised in line with the Board’s recommendations, the content
of these tables may be different from those in the final version of the impact assessment
report, as published by the Commission.
Specific cists are linked to the use of the instrument in specific, future cases and for the reasons
stated in the report it is not feasible to estimate them at the design phase.
I. Overview of Benefits (total for all provisions) – Preferred Option
Description Amount Comments
Direct benefits
EU authorities are able to adopt
policies, which were at the origin of
the coercion, without being subject to
external pressure
By deterring third country coercion or deterring threats of using coercive
measures
More predictable environment in the
sphere of trade policy; including:
(i) lower transaction costs for EU
exporters, which is of particular
importance for SMEs
If coercion would take the form of host country import restrictions
(ii) lower host country compliance
costs for EU investors
If coercion would take the form of restrictions in the market of the
coercing country
(iii) lower costs for EU importers and
predictable supply
If imports of inputs for their economic activity would be restricted
Indirect benefits
Continued and stable employment In sectors that would be targeted by coercive country
Lower or stable prices for EU
consumers
4
Costs are specified based on the assumption that the instrument is able to deter coercion and
therefore is used less than once a year. This is classified as “one-off” in the table below.
II. Overview of costs – Preferred option
Citizens/Consumers Businesses Administrations
One-off Recurrent One-off Recurrent One-off Recurrent
Policy
package 2
Direct costs Higher costs of
products if there is
pass-through
effect
Third country:
may take place if a
specific group of
funding or persons
is affected by
countermeasures
Higher costs of
imported products;
depressed market
access; restricted
operations of EU
investors abroad
(depending on
countermeasures)
Third country: may
take place if a specific
group of funding or
persons is affected by
countermeasures
Administrative
costs of
assessing the
damage to the
EU economic
operators and
designing
countermeasures
Third country:
may take place
if a specific
group of funding
or persons is
affected by
countermeasures
Indirect costs