Regulation (EU) 2023/2675 of the European Parliament and of the Council of 22 November 2023 on the protection of the Union and its Member States from economic coercion by third countries

Article 1

Subject matter and scope

This Regulation also establishes a framework for the Union to seek reparation for the injury to the Union, where appropriate.

Article 2

Economic coercion

In determining whether the conditions of paragraph 1 are met, the Commission and the Council shall take into account the following:

(a) the intensity, severity, frequency, duration, breadth and magnitude of the third-country measure, including its impact on trade or investment relations with the Union, and the pressure arising from it on the Union or a Member State;

(b) whether the third country is engaging in a pattern of interference seeking to prevent or obtain particular acts from the Union, a Member State or another third country;

(c) the extent to which the third-country measure encroaches upon an area of the Union’s or a Member State’s sovereignty;

(d) whether the third country is acting on the basis of a legitimate concern that is internationally recognised;

(e) whether and in what manner the third country, before the imposition or application of the third-country measure, made serious attempts, in good faith, to settle the matter through international coordination or adjudication, either bilaterally or within an international forum.

Article 3

Definitions

For the purposes of this Regulation, the following definitions apply:

(1) ‘third-country measure’ means any action or omission attributable to a third country under international law;

(2) ‘particular act’ means any legal or other act, including an expression of a position, by an institution, body, office or agency of, respectively, the Union or of a Member State, or of a third country;

(3) ‘injury to the Union’ means a negative impact, including economic damage, on the Union or a Member State, including on Union economic operators, caused by economic coercion;

(4) ‘third country’ means any State, separate customs territory or other subject of international law, other than the Union or a Member State.

Article 4

Examination of third-country measures

The Commission shall carry out the examination based on substantiated information gathered on its own initiative or received from any reliable source, including a Member State, the European Parliament, economic operators or trade unions.

The Commission shall ensure the protection of confidential information in accordance with Article 15 including, when necessary, the protection of the identity of the person who supplies the information.

The Commission shall make publicly available a secure tool with a view to facilitating the submission of information to the Commission.

The Commission may request Member States to supply such information and Member States shall act upon that request expeditiously.

By publishing a notice in the Official Journal of the European Union and, where appropriate, through other suitable means of public communication, the Commission may invite stakeholders to submit information. The Commission shall specify a date by which that information is to be submitted, taking into account the period indicated in the first subparagraph of paragraph 2.

If the Commission publishes such a notice, it shall notify the third country concerned that the examination has started.

Article 5

Determination with regard to the third-country measure

In that proposal, the Commission shall explain how those conditions are met.

The proposal shall set out an indicative period for the Commission to assess whether the conditions of Article 8(1) are met. That period shall not exceed 6 months, unless a duly justified longer period is necessary in light of the specific circumstances of the case.

The assessment of whether it is appropriate to request the third country to repair the injury to the Union shall be based on all circumstances of the case. That assessment shall be based, in particular, on the nature and extent of the damage caused and the general obligation under customary international law to make full reparation for the injury caused by an internationally wrongful act.

The Council may amend the proposals referred to in paragraphs 1 and 2, acting by qualified majority.

The Council shall act within 8 weeks of the submission of the proposals referred to in paragraphs 1 and 2.

By way of derogation from the second subparagraph, the Council may act after that eight-week period provided that it informs the Commission of a delay and of the reasons for that delay.

The total period for the Council to act shall normally not exceed 10 weeks from the submission of the proposals referred to in paragraphs 1 and 2.

In the exercise of its implementing powers, the Council shall apply Article 2(1), which sets out the conditions for the existence of economic coercion, and the criteria set out in paragraph 2, second subparagraph, of this Article, and shall explain how those conditions are met and criteria are applied.

Article 6

Engagement with the third country

Where the third country enters into consultations with the Union in good faith, the Commission shall engage in such consultations expeditiously.

In the course of such consultations, the Commission may explore options with the third country, including the following:

(a) direct negotiations;

(b) submitting the matter to international adjudication;

(c) mediation, conciliation or good offices by a third party to assist the Union and the third country in their efforts under this Article.

Article 7

International cooperation

The Commission shall enter into consultations or cooperate with any third country affected by the same or similar economic coercion or with any other interested third country, with a view to obtaining the cessation of the economic coercion, after having consulted the Council, where applicable in accordance with the Treaties.

Such consultations and cooperation may involve, where appropriate:

(a) sharing relevant information and experiences to facilitate a coherent response to such economic coercion;

(b) coordination in relevant international fora;

(c) coordination in the response to the economic coercion.

The Commission shall invite, where appropriate, Member States to participate in such consultations and cooperation.

Such consultations and cooperation shall not unduly delay the procedure under this Regulation.

Article 8

Union response measures

The Commission shall adopt Union response measures by means of implementing acts where all of the following conditions are met:

(a) action pursuant to Articles 5 and 6 has not resulted, within a reasonable period, in the cessation of the economic coercion and, where requested pursuant to Article 5(10), in the reparation of the injury to the Union;

(b) the adoption of Union response measures is necessary to protect the interests and rights of the Union and its Member States in the particular case, in light of the options available;

(c) the adoption of Union response measures is in the Union interest, as determined in accordance with Article 9.

Where the economic coercion has ceased but the third country has not repaired in full the injury to the Union, despite having been requested to do so, the Commission shall base the assessment of whether the condition referred to in the first subparagraph, point (b), of this paragraph, is met on all the circumstances of the case. That assessment shall be based, in particular, on the nature and extent of the damage caused and the general obligation under customary international law to make full reparation for the injury caused by an internationally wrongful act.

The implementing acts referred to in the first subparagraph of this paragraph shall be adopted in accordance with the examination procedure referred to in Article 18(2).

In the implementing act referred to in paragraph 1 of this Article, the Commission shall state the reasons why it considers that the conditions referred to in that paragraph are met and why it considers that the Union response measures are appropriate in light of the criteria referred to in Article 11.

Union response measures shall be adopted as:

(a) measures of general application; or

(b) measures which apply to certain natural or legal persons which engage or might engage in activities falling under Article 207 TFEU and are connected or linked to the government of the third country.

Union response measures referred to in the first subparagraph, point (a), may be designed in such a way that they affect particular sectors, regions or operators of the third country in accordance with the rules of origin and nationality set out in Annex II.

The Commission shall set that date, taking into account the circumstances of the case, to allow for the notification of the third country pursuant to paragraph 7 and for the third country to cease the economic coercion and, where requested, repair the injury to the Union.

Upon adoption of the implementing act referred to in paragraph 1, the Commission shall notify the third country thereof and:

(a) call upon the third country to immediately cease the economic coercion and, where appropriate and where requested, to repair the injury to the Union;

(b) offer to negotiate a solution with the third country; and

(c) notify the third country that the Union response measures will apply, unless the economic coercion ceases and, where appropriate and where requested, the third country repairs the injury to the Union.

In the event that the Commission has such credible information, it shall publish a notice in the Official Journal of the European Union indicating that it has such information and the date of application of the implementing act referred to in paragraph 1, as deferred in accordance with the first subparagraph of this paragraph.

That repealing implementing act shall be adopted in accordance with the examination procedure referred to in Article 18(2).

The Commission shall publish a notice in the Official Journal of the European Union indicating the date of application of the implementing act as referred to in paragraph 1 of this Article.

Article 9

Determination of the Union interest

The determination of the Union interest in taking, suspending, amending or terminating Union response measures shall be based on all available information and consist of an appreciation of the various interests at stake, taken as a whole. Those interests include primarily the preservation of the ability of the Union and its Member States to make legitimate sovereign choices free from economic coercion, and all other interests of the Union or the Member States specific to the case, the interests of Union economic operators, including upstream and downstream industries, and the interests of Union final consumers affected or potentially affected by the economic coercion or by Union response measures.

Article 10

Conditions for applying Union response measures to certain natural or legal persons

For the purposes of Article 8(3), first subparagraph, point (b), a natural or legal person may be considered as connected or linked to the government of the third country where:

(a) that government beneficially owns more than 50 % of the equity interest in such legal person, exercises directly or indirectly more than 50 % of the voting rights in it, or has the power to appoint a majority of its directors or otherwise to legally direct its actions;

(b) such person benefits from exclusive or special rights or privileges granted in law or in fact by the government of the third country concerned, where it operates in a sector where that government limits the number of suppliers or buyers to one or more, or it is allowed directly or indirectly by that government to exercise practices which prevent, restrict or distort competition; or

(c) such person effectively acts on behalf of, or under the direction or instigation of, the government of the third country concerned.

Where the Commission has reason to believe that a natural or legal person meets the criteria set out in Article 8(3), first subparagraph, point (b), and is considering the adoption of Union response measures with regard to that person, it shall inform that person of the following:

(a) the reasons why the Commission believes that that person meets those criteria;

(b) the Union response measures that the Commission is considering to adopt with regard to that person;

(c) the possibility for that person to submit, within a reasonable period, observations on whether that person meets those criteria.

In that notice, the Commission shall give other interested parties the opportunity to submit observations.

Article 11

Criteria for selecting and designing Union response measures

The Commission shall select and design appropriate Union response measures on the basis of available information, including as gathered pursuant to Article 13, and taking into account the determination made pursuant to Article 5, the criteria set out in Article 2(2), the determination of the Union interest pursuant to Article 9, any relevant action pursuant to the Union’s common foreign and security policy, as well as the following criteria:

(a) the effectiveness of the Union response measures in inducing the cessation of the economic coercion and, where requested, the reparation of the injury to the Union;

(b) the avoidance or minimisation of negative impact on: (i) Union actors affected by Union response measures, in light of, inter alia, the availability of alternatives for such actors, such as alternative sources of supply for goods or services; (ii) the investment environment in the Union or a Member State, including the impact on employment and regional development policy;

(c) the avoidance or minimisation of negative impact on the promotion of economic growth and employment through the protection of intellectual property rights as a means to promote innovation and a knowledge economy in the Union or in a Member State;

(d) the potential to provide relief to Union economic operators affected by the economic coercion;

(e) the avoidance or minimisation of negative effects of the Union response measures on Union policies or objectives;

(f) the avoidance of disproportionate administrative burden and costs in the application of the Union response measures;

(g) the existence and nature of any response measures enacted by third countries affected by the same or similar economic coercion, including, where relevant, any coordination pursuant to Article 7;

(h) any relevant criteria established in international law.

In selecting Union response measures, the Commission shall give preference to measures which most effectively ensure compliance with criteria set out in the first subparagraph, points (a) and (b).

Without prejudice to paragraph 2, when selecting and designing an appropriate response measure that affects a procedure whereby a public authority in the Union grants authorisations, registrations, licences or other rights to a natural or legal person for the purposes of their commercial activities, the Commission shall consider Union response measures in the following hierarchical order:

(a) measures affecting procedures initiated after the entry into force of the implementing act referred to in Article 8(1);

(b) where measures referred to in point (a) of this paragraph are not available, measures affecting procedures not yet completed upon the entry into force of the implementing act referred to in Article 8(1).

Where none of the measures referred to in the first subparagraph are possible, the Commission may, in exceptional circumstances, consider other response measures, where it has been demonstrated, in light of the information and views gathered pursuant to Article 13, that those other measures would ensure effectiveness, without disproportionately affecting the upstream industries, downstream industries or final consumers within the Union, or imposing a disproportionate burden on the process of administration of relevant national regulations.

When selecting and designing a Union response measure referred to in the first subparagraph, the Commission shall take into account the level of harmonisation and give preference to measures which affect procedures applied on a Union-wide basis or in an area where extensive Union law exists.

Union response measures referred to in the first subparagraph shall not interfere with the administrative decisions of Union and Member State authorities that are based on the evaluation of scientific evidence.

The Commission may adopt such Union response measures where not applying them to such services supplied or direct investments made would be insufficient to effectively achieve the objective of this Regulation, in particular where the effect of Union response measures could otherwise be avoided or circumvented by the third country or the person concerned.

In assessing whether to adopt such Union response measures, the Commission shall consider, inter alia, the following criteria, in addition to those set out in paragraphs 1 and 2:

(a) the patterns of trade in services and investment in the sector targeted by the envisaged Union response measures and the risk of avoidance or circumvention by the third country or the person concerned of any Union response measures not applying to services supplied, or direct investments made, within the Union;

(b) the possible effective contribution of Union response measures referred to in the first subparagraph to obtaining the cessation of economic coercion and the reparation of the injury to the Union;

(c) the existence of alternative measures capable of obtaining the cessation of the economic coercion and the reparation of the injury to the Union that are reasonably available and less restrictive of trade in services or investment within the Union.

The adoption of such Union response measures shall be duly justified in the implementing act referred to in Article 8(1) in the light of the criteria set out in this paragraph.

Article 12

Amendment, suspension and termination of Union response measures

Where the third country and the Union or the Member State concerned have concluded an agreement, including on the basis of an offer from that third country, to submit the matter to binding international third-party adjudication and that third country suspends its economic coercion, the Commission shall suspend the application of the Union response measures for the duration of the adjudication proceedings.

Where an adjudication decision or a settlement with the third country requires implementation by the third country, the Commission shall suspend the application of the Union response measures provided that the third country is engaged in the implementation of that adjudication decision or settlement.

The Commission shall suspend or resume the application of Union response measures where necessary in light of the Union interest determined pursuant to Article 9, or where necessary to facilitate continued engagement pursuant to Article 6(3) after the adoption of Union response measures.