The ultimate economic security instrument – or a dud? The EU Anti-Coercion Act’s usefulness in a geopolitical minefield

Power politics now permeates American and Chinese trade policies, and geopolitics (where interdependence is viewed as a vulnerability) has led to increases in trade restrictions globally. Economic security is now national security, even in Europe, where resilience, de-risking, and countering non-market policies and practices is paramount. Scholars and pundits increasingly accept the idea of a geopolitical EU trade policy, with geo-economic power – ideas buttressed by the EU’s trade strategy and the European Economic Security Strategy. The latter also emphasizes the centrality of trade defence instruments (TDIs) in addressing economic vulnerabilities and economic security risks. Yet, both revised and new EU TDIs reflect an uneasy compromise between the EU’s retained normative preferences for multilateralism and recognition that a fragmented and geopolitical trading system requires assertive action. The Anti-Coercion Act (ACI) – a ground-breaking instrument created in response to Trump’s coercive trade policy – exemplifies the most elaborate step thus far of infusing foreign and security policy into trade policy, while epitomizing the EU’s difficult balancing act. The ACI’s structure appears laden with political challenges come implementation. Drawing on theories of Commission entrepreneurship and different internal levels of policy, and using primary sources, interviews with policy makers, and a comparison with Section 301 of the US Trade Act of 1974, this paper assesses the political and economic challenges resulting from the inter-institutional compromises at the heart of the ACI, while raising further questions for future research. Our argument is that inter-institutional compromises diminished its effectiveness and limit its usefulness. Recognizing the ACI’s novelty, we consider what that insights on its potential effectiveness and limitations can be gleaned from examining US Section 301 cases, where achieving the intended results often required simultaneously employing other instruments and additional policy measures.