1 Introduction

The World Trade Organization (WTO) has long represented the cornerstone of the European Union’s (EU) external trade policy. Its rules-based order, grounded in non-discrimination and predictability, has provided a normative anchor for global trade governance. Yet, as strategic competition between major powers has intensified, the international trading system – a pillar of the post-World War II liberal order – has undergone a profound and multifaceted transformation. The multilateral trade regime, once sustained by shared commitments to openness, legal predictability, and rules-based cooperation, is increasingly challenged by geopolitical tensions, power asymmetries, and the strategic use of economic instruments for political purposes. The resurgence of great-power rivalry, particularly between the United States and China, has reshaped global economic relations. Trade is no longer viewed solely as a vehicle for mutual economic benefit, but also as a tool of influence, leverage, and even confrontation.

Within this shifting geopolitical landscape, the concept of economic security has become a central axis around which new policy initiatives revolve (European Commission, 2024a). Governments increasingly link trade policy to national security objectives, adopting strategies such as reshoring, nearshoring, de-risking, and reducing strategic dependencies on rival powers (Mavroidis & Sapir, 2024). The securitization of trade – the reframing of trade relations through the lens of security – has become the norm rather than the exception. In this context, the WTO’s legal framework reveals an important limitation: it cannot address acts of economic coercion, understood as the use of trade or investment measures by one state to pressure another into changing its policies. This omission is deliberate. The WTO was constructed to address only commercial policies, not explicit security concerns (with an exception under Article XXI, discussed later). Any attempts at incorporating coercion would not only clash with the existing liberal vision of expanding commerce that underpins the WTO, but, crucially, would also be infeasible to change in today’s political climate.

The Anti-Coercion Instrument (ACI), adopted in December 2023, fills this gap for the EU. Designed as a defensive mechanism to respond to coercive acts by third countries, it explicitly integrates security considerations into trade governance by relying on principles of public international law – norms not embedded in the WTO framework. In a Union traditionally viewed as a strong supporter of multilateralism and legalism in trade, the ACI reflects what scholars have described as a “unilateral” (De Ville, Happersberger & Kalimo, 2023) or “geoeconomic” turn (Herranz-Surrallés, Damro & Eckert, 2024), focused on safeguarding political autonomy and economic sovereignty. The ACI constitutes a key element of the 2023 European Economic Security Strategy and stands out as a paradigmatic example of the EU’s shift toward a more assertive, security-focused trade policy (Demertzis et al., 2024; Weyand, 2024, 2025).

The ACI is both a recognition of the EU’s increased focus on addressing overlapping security and commercial concerns, as well as the difficulty of separating the two, conceptually and institutionally. Officially part of the EU’s Common Commercial Policy (CCP), the ACI introduces a new double foreign policy threshold that conditions its operationalization. It cannot be triggered purely on economic or commercial grounds since it requires a political and security-based determination that a third country is subjecting the EU or a Member State to economic coercion. This dual feature – a trade tool with a foreign policy trigger – makes the ACI an institutional innovation, mirroring the now intertwined and interacting logics of economy, trade, and security in EU external relations.

Freudlsperger and Meunier (2024) describe the ACI as an unintended “commercialization of foreign policy,” since it allows the application of political and economic sanctions through qualified-majority voting instead of the traditional consensus required in foreign policy. However, the instrument was never intended as a replacement for the sanctions policy. There is now also widespread awareness in the European Commission (hereinafter the Commission) that deep interdependence can create strategic risks, especially when economic partners use trade or investment as tools of coercion. This geoeconomic shift is part of the broader political discourse on “strategic autonomy,” which has become a defining narrative of EU external action and now permeates trade policy, and the use of economic instruments for security and political goals (Herranz‐Surrallés, Damro & Eckert, 2024). The EU’s dependence on global supply chains, access to critical technologies, and exposure to third-country regulatory pressure and coercion mean that economic openness and commercial exchange are intricately linked to security beyond the traditional dual-use products.

This article argues that the ACI reflects a form of institutional adaptation based on the triangulation of economic coercion, internal debates and the securitization of trade, and the structural limitations of the WTO. The ACI embeds a foreign policy threshold within a trade instrument, providing a means to address issues that cannot be resolved through other instruments or the WTO, while also supporting the rule of law in an international trading system increasingly shaped by power politics and the weaponization of interdependence (Farrell & Newman, 2019).

The article is structured as follows. The next section discusses the concept of securitization and its relevance for understanding the context in which the ACI was created. The third section discusses how the ACI maintains the institutional balance between trade and foreign policy within the EU’s legal framework. The fourth section analyses how the ACI challenges the WTO regime by broadening the EU’s legal authority for action beyond trade law. The fifth section considers the implications for the EU and the international trading system within the wider debates on trade and power, and the sixth section concludes.

2 The Securitization of Trade

Securitization refers to the process through which political, economic, or social issues are reframed as security concerns, thereby justifying exceptional measures beyond ordinary policymaking (Buzan, Wæver & de Wilde, 1998). The theoretical foundations of securitization originate in the work of the Copenhagen School, which conceives of security not as an objective condition but as an intersubjective construct. According to this approach, security emerges through discourse – specifically through speech acts – that convince a relevant audience that an issue constitutes an existential threat requiring exceptional action (Buzan, Wæver & de Wilde, 1998; Fernández, 2024). Therefore, security is not merely descriptive but also constitutive: it creates a new reality in which norms can be suspended and extraordinary measures justified. As McDonald (2008) argues, a speech act declaring a security threat transforms the normative environment and legitimizes actions that would otherwise be politically or legally unacceptable.

Subsequent scholarship has refined this framework. Balzacq, Léonard, and Ruzicka (2016) argue that securitization is less about identifying existential threats and more about the interaction between a securitizing actor and an audience that accepts the framing of a particular referent object – such as trade – as relevant to security. “The ‘security-ness’ of an entity,” they note, “does not depend on objective features but stems from the interactions between a securitizing actor and its audience.” (Balzacq et al., 2016, p. 496) This shifts the analytical focus from objects to processes and highlights the political, contingent, and context-dependent nature of securitization. It can therefore be partial, reversible, and contested: what is securitized today might be de-securitized tomorrow, reflecting the fluidity of security discourse.

Within the EU, securitization does not occur in a vacuum; external developments shape the context in which policies develop, but securitization is not always the direct response to a specific external action. The international system in which the EU operates is now certainly more competitive, geographically fractured, and security-oriented (Lavery & Schmid, 2021; Costa, Soler i Lecha & Vlaskamp, 2025; Herranz-Surrallés, Damro & Eckert, 2024; Christou & Damro, 2024). Mercantilism, protectionism, and Chinese and American violations of the spirit – if not always the rules – of WTO-centred trade, along with supply chain vulnerabilities, trade wars, and illegal state-subsidies, are prevalent, and commerce and security concerns overlap (Bauerle Danzman & Meunier, 2024; Garcia-Duran, Eliasson & Costa, 2023; Herranz-Surralés, Damro & Eckert, 2024). However, the securitization debate on the common commercial policy began internally, and the increased linkages between various forms of competition policy and traditional security and commerce has been developing since 2014, starting with DG Competition (Bentley & McNamara, 2025).

Vlasiuk, Meunier and Roederer-Rynning (2024) focus on the internal securitization of investment policy, while Schmitz and Seidl (2023) discuss the internal factions that shaped economic security through the development of the EU’s Open Strategic Autonomy. The discourse on strategic autonomy is now a key narrative in the EU’s approach to external actions. Levels of economic openness and commercial exchange are now regularly discussed as closely tied to security, a shift that reflects an awareness that deep interdependence can pose strategic risks, especially when partners use trade or investment as tools of coercion. Herranz‐Surrallés, Damro and Eckert (2024, p. 920) describe the trend on strategic autonomy as “a rethinking of liberalization and market integration through the adoption of more geopolitical approaches to the use of economic instruments.” Thus, while the larger context, the international system, is clearly important and has influenced the internal debate and thinking on economic security and trade, the securitization of commerce was not a direct response to a specific external development. Rather, it evolved and developed internally.

The 2023 Economic Security Strategy is a cornerstone of this paradigm. It stresses a comprehensive approach to strengthen and protect security interests through economic tools. To emphasize this, DG Trade was renamed “DG Trade and Economic Security” in late 2024, aligned with the start of the von der Leyen II Commission (1 December 2024). The EU now views openness and interdependence not just as economic benefits but also as vulnerabilities to manage. While Bauerle Danzman (2025, p. 7) sees securitization as turning a policy domain away from the normal contestation and deliberations of politics, the securitization of trade policy and especially the ACI has instead created a larger area where economic security is part of trade policy and trade instruments respond to others’ trade, foreign, and security policies. Economic coercion demonstrates this overlap: when a third country weaponizes trade to influence policy choices, the boundary between economic and security rationales disappears. It is within this context that the ACI emerged.

Thus, the ACI itself is also not the result of a single securitizing act but rather an outcome of a broader political context that has enabled and shaped its emergence: the securitization of trade within the EU. Following Mügge’s more flexible definition, securitization can be understood as “the degree to which a referent object is understood and potentially governed as security-relevant” (Mügge, 2023, p. 1435). This perspective allows us to trace how economic measures – such as foreign investment, trade flows, or export restrictions – are increasingly interpreted not through the lens of market efficiency but as potential vectors of vulnerability or instruments of strategic influence. Securitization, in this sense, does not require an explicit security label: it materializes through policy shifts, legal innovations, and institutional realignments that redefine non-security domains as matters of collective protection.

Institutionally, the securitization of trade has spurred the development of several new, innovative trade instruments. As Jerzyniak and Herranz-Surrallés (2024, p. 1029) observe, the convergence of economic and foreign policy has resulted in the creation of hybrid instruments that combine commercial logic with security considerations. The Foreign Direct Investment Screening Regulation, the International Procurement Instrument (IPI), and the ACI are part of this new wave of trade instruments. Together, they represent the EU’s efforts to address structural power imbalances while protecting its political space from external interference.

By openly acknowledging the linkages between commerce and security, the EU has – according to Christou and Damro (2024, p. 1082) – embraced “deep geopoliticization.” In the field of trade defence instruments, this, according to Bauerle Danzman and Meunier (2024, p. 1100) entails a willingness to depart from liberal economic orthodoxy and adopt more mercantilist strategies when necessary to defend European interests. Although the Directorate General for Trade originally drafted the ACI proposal to deter or counter coercion while preserving open markets – a trade-focused, liberal approach – it has, as Christou and Damro (2024) note, reluctantly accepted that trade now operates within an overtly geopolitical environment (cf. Weyand, 2024, 2025).

During the evolution of the securitization of commerce, there were a series of coercive practices targeting EU Member States that reinforced the ongoing internal debate on securitization and the political momentum behind the ACI. In 2019–2020, during the revision of the Trade Enforcement Regulation, both the European Parliament and national governments voiced concerns over the lack of tools to counter economic coercion (Hackenbroich, Medunic, & Zerka, 2022). The idea of an “economic Article 5,” similar to NATO’s collective defence clause, gained traction in key capitals, particularly Berlin and Paris (Freudlsperger & Meunier, 2024, p. 10). The threat of US tariffs against France in response to its digital services tax, under Section 301 of the U.S. Trade Act of 1974, demonstrated how even allies might use economic pressure to influence domestic policies. Meanwhile, Chinese actions – including selective customs checks, informal boycotts, and politically motivated restrictions, especially the campaign against Lithuania after its engagement with Taiwan – exposed the EU’s vulnerability to asymmetric economic tactics.

The Commission’s 2021 Impact Assessment Report captured the variety of ways in which economic coercion can occur, classifying them as “explicit coercion,” “disguised coercion,” and “silent coercion” (Commission, 2021b, p. 9). These typologies highlight the confusion surrounding coercive practices and the difficulty of addressing them through conventional trade instruments. It also signals an important shift in the EU’s own understanding of trade policy, toward securitization. Trade is no longer merely a sphere of economic exchange; trade has become a vector of political contestation and an arena where security must be actively safeguarded (Commission, 2023).

Recognizing the inadequacy of existing instruments, the Commission incorporated the ACI into its 2021 work programme and the broader trade strategy, An Open, Sustainable and Assertive Trade Policy (Commission, 2021a); a document in which it spoke of how trade policy protects economic and public security (p. 20). This marked the emergence of a new policy space at the intersection of trade and security, in which instruments like the ACI serve defensive, protective, and strategic purposes. They are intended not only to respond to coercion but also to deter it, by signalling that the EU is willing and able to adopt proportionate countermeasures. In doing so, the Union positions itself as a rules-based actor that nonetheless acknowledges the erosion of global norms and adapts accordingly.

3 The Anti-Coercion Instrument as a dual Instrument: Balancing Trade and Foreign Policy

The ACI institutionalizes the coexistence of trade and foreign policy logics within the EU’s external action. Legally anchored in Article 207 of the Treaty on the Functioning of the European Union (TFEU), which governs the Common Commercial Policy, the ACI introduces a foreign policy threshold requiring a qualified-majority approval in the Council of Ministers (hereinafter the Council) to determine the existence of coercion and to authorize countermeasures. This dual threshold ensures that security concerns are politically validated while preserving the Commission’s leadership in trade implementation. In so doing, ACI embodies the EU’s distinctive institutional balance between supranational and intergovernmental authority.

DG Trade leads the assessment of coercion, while the Council and the Member States decide whether a coercive act warrants retaliatory measures. This dual-governance arrangement mirrors the EU’s internal separation of powers: the Commission provides technocratic evaluation and legal reasoning, while the Council contributes political judgment. The outcome is not a merger of trade and security policy but a structured coexistence between them. This hybridization exemplifies the securitization of trade within the EU’s institutional framework.

This was no small feat. The EU’s legal architecture creates a complex terrain for managing the overlap between trade and security. The Lisbon Treaty sought to bring greater coherence to the Union’s external actions by establishing that all external policies – including trade and foreign policy – should pursue the same overarching objectives, as set out in Article 21(2) TEU. Yet it simultaneously entrenched a bifurcation in legal bases and governance structures: while the Common Foreign and Security Policy (CFSP) follows an intergovernmental approach under the TEU, other areas of external action – such as trade, development cooperation, or human rights promotion – operate under the TFEU and a supranational logic (Szép & Wessel, 2022).

This dual structure has far-reaching implications. The CFSP is based on unanimity in decision-making, with limited powers for the Commission and the European Parliament, and a dominant role for Member States acting through the Council. In contrast, the CCP is one of the most integrated areas of EU policy, marked by (near) exclusive Union competence and strong institutional roles for both the Commission and the European Parliament (Gstöhl & De Bièvre, 2018; Petri, Thevenin & Liedlbauer, 2020). When policy issues arise at the intersection of trade and security, such as economic coercion, the EU’s institutional response must carefully navigate this divide. There is no straightforward way to determine whether the proper response should be handled through trade or foreign policy, nor is there a single actor with uncontested primacy.

The ACI represents a deliberate and innovative effort to resolve this structural tension. It does so by creating a hybrid mechanism that maintains the treaty-based legal balance between the Commission’s trade powers and the Council’s authority over foreign and security policy. Although legally anchored on TFEU Article 207, the ACI introduces a dual foreign policy threshold that must be met before activation. This includes shared implementing powers requiring a qualified-majority vote to determine the existence of coercion and a second qualified-majority vote to adopt countermeasures. In this way, the ACI incorporates foreign policy oversight within a trade-policy mechanism without shifting the instrument into the CFSP domain.

The first defining feature of the ACI is the Commission’s central role in initiating investigations. DG Trade assesses whether a third-country measure amounts to economic coercion by examining objective factors such as intensity, duration, and impact, including how much the measure limits legitimate policy choices of the Union or its Member States. The Commission’s analysis emphasizes effects rather than political intent, using a functional approach consistent with its rules-based ethos and preserving the technocratic nature of trade policymaking.

The second defining feature is the Council’s decisive role in validating the Commission’s findings and approving any responsive measures. The Council votes by qualified majority on the Commission’s implementing act, thus determining economic coercion – departing from the traditional comitology procedure under Article 291 TFEU. It must then vote again to authorize countermeasures, under a “no-opinion, no-rule” system (meaning an affirmative vote is required). The result is that, to reach the stage of implementing countermeasures, the Council must vote twice in the affirmative, with a qualified majority in favour.¹ These procedural safeguards constitute a de facto dual foreign policy threshold, ensuring that no action is taken without broad political agreement.

The Council’s involvement reflects the long-standing reluctance of national governments to cede control over external security matters to the Commission. During negotiations, several Member States expressed strong reservations about granting the Commission implementing powers in areas with clear foreign policy implications (Gijs, 2022). In August 2022, the Council’s legal service issued a pivotal opinion confirming that the ACI could be adopted under Article 207 TFEU, but only if determinations of coercion and related countermeasures were subject to Council approval by qualified majority (Council, 2023). This opinion was essential in safeguarding the instrument’s legal basis and securing Member State consent. It also reinforced the principle that institutional balance can be maintained through procedural design rather than through new treaty clauses or delegated emergency competences.

The Commission, for its part, carefully framed the ACI as a trade instrument rather than a foreign policy tool. DG Trade officials emphasized its rules-based character and complementarity with CFSP policies such as sanctions (European Parliament, 2025). As Couvreur (2024) observes, the Commission was “very allergic” to any suggestion that the ACI constituted a foreign policy measure, fearing this would undermine its legal foundation and restrict its practical utility. DG Trade also proposed to the Commission that keeping the decision on countermeasures at the EU level would shield Member States from domestic or international political backlash. Nevertheless, Member States resisted ceding this authority, prompting a compromise whereby only the Commission can initiate investigations and propose measures, while the Council retains ultimate decision-making power. This configuration reinforces the Commission’s gatekeeping function and ensures procedural predictability.

In practice, the ACI has generated an intricate choreography between supranational and intergovernmental actors. DG Trade’s Unit F4, responsible for economic security, collaborates closely with the European External Action Service (EEAS), exchanging intelligence and assessments on coercive practices. While the EEAS contributes diplomatic and geopolitical analysis, DG Trade provides economic and legal expertise. This coordination exemplifies the inter-institutional adaptation required to manage hybrid threats in a complex global environment.

From a design perspective, the ACI includes features similar to those found in other EU instruments that link trade with non-trade objectives. The Generalised Scheme of Preferences (GSP), for instance, grants trade benefits to developing countries conditional on compliance with human rights and labour standards (Portela, 2023). Similarly, the International Procurement Instrument (IPI) ties market access to reciprocity and has been interpreted as part of the securitization of reciprocity itself (Meershoek, 2023). The ACI resonates with this logic, though in inverse form: it remains inactive unless coercion occurs, establishing a one-for-one relationship between third-country coercive measures and the EU’s defensive trade response.

Taken together, the aforementioned instruments reflect a broader transformation in EU trade policy – from a liberalizing paradigm centred on market expansion to a strategic paradigm focused on leverage, resilience, and normative projection (Schmidt & Seidl, 2023; Garcia-Duran, Eliasson & Costa, 2023). The ACI, however, avoids both extremes: it neither subordinates foreign policy to trade logic (trade dominance) nor reduces trade policy to an instrument of pure geopolitical strategy (security dominance). Instead, it establishes a dual-veto system whereby the Commission may decline to act if it finds no coercion, and the Council may block measures on political grounds even if the Commission identifies coercion.

By institutionalizing a collaborative decision-making process, the ACI preserves the unity of the EU’s external action and the integrity of its legal framework. It neither fuses trade and foreign policy into a single domain nor artificially separates them. Rather, it offers a pragmatic template for addressing cross-cutting challenges in an era where the boundaries between markets and power, technology and commerce, and economics and security are increasingly blurred. By so doing, the EU addresses the different logics of security and trade without having to choose between them, challenging the typical relationship between national security and trade described by Cohen (2020). Moreover, separating economic security from military security, the ACI overcomes a limitation that has proven extremely challenging to address at the WTO (Paulsen, 2025).

At the same time, this arrangement may produce new political sensitivities. A future Council rejection of a Commission finding of coercion could trigger internal tit-for-tat dynamics, as governments anticipate future reciprocity in similar cases. If states A and B fail to support the claims by state C, the latter may retaliate in the future, contingent on state C being perceived as likely to garner enough support in future cases to negate claims from states A or B. Conversely, a Council decision in favour of action by qualified majority – over the objections of several Member States – could expose internal divisions, weaken the instrument’s deterrent effect, and potentially expose individual states to further pressure from third countries.

When the Council approved countervailing duties on Chinese electric vehicles after a Commission anti-subsidy investigation, Germany, Hungary and a few others opposed them because of fears of Chinese retaliation (Tamin & Burnett, 2024; Verhelst & von der Burchard, 2024). Because 12 Member States abstained there was no majority opinion, and the Commission could impose the tariffs.² This is not possible under the ACI, which requires two affirmative votes by the Council. The very public acrimony that erupted among Member States over the tariffs on Chinese EVs can emerge even more prominently under the ACI. To mitigate such risks, Member States are likely to prefer consensus and avoid formal votes, either aligning with the Commission or abstaining (from voting), to prevent recognition of coercion and/or the activation of countermeasures. The need for two affirmative votes by Member States, and Member States control security threats, make it less likely to invoke GATT Article XXI, and the Commission has argued that Article XXI is objectively decidable.

The political duality of the ACI was evident when the US imposed its “reciprocal” tariffs on 2 April, 2025, where the Commission’s interest in safeguarding the Union’s economic interests had to be balanced with Member States’ political concerns. The Commission, given the political divisions among member states about how to deal with the US, the need for America’s support in Ukraine’s fight against Russia, and the Commission’s preference for negotiations, did not deem the tariff, or Trump’s occasional outbursts against the EU in May and June, as warranting a coercion investigation (Inside US Trade, 2025a). The Commission’s statements only addressed the economic harm from tariffs, they made no mention of American coercion to change EU policies in order to remove the tariffs, and no Member State called for an ACI investigation.

As negotiations proceeded, French President Macron and the chair of the European parliament’s trade committee Bernd Lange raised the necessity of being prepared to use all measures (including the ACI), if negotiations failed, but Commission president von der Leyen rejected resorting to the ACI, leaving it as a “last resort” (Inside US Trade, 2025a, b, c). The Commission understood that there was no political consensus for an ACI investigation, that reaching an agreement with the US was a strategic decision, and that creating further tensions and conflict was undesirable (cf. Weyand, 2025). German leaders, business organizations, and many MEPs wanted a quick agreement to ensure stability, and it was widely understood that the EU needed the US on board to support Ukraine against Russia’s illegal invasion, and upsetting trade negotiations could jeopardize that (Inside US Trade, 2025d; Weyand, 2025). The calls for the ACI instead came predominantly from journalists, academics and pundits (Moller-Nielsen, 2025). It was only when Trump threatened to annex Greenland and impose tariffs on countries expressly opposing such moves that some national leaders, primarily President Macron and Chancellor Mertz, and some MEPs called for the use of the ACI, while other Member States, including Italy, and the Commission still expressed reservations, again preferring negotiations while keeping “all options open” (Moller-Nielsen, 2026; Politico, 2026; Commission, 2026). A compromise deal brokered by NATO Secretary General Rutte calmed tensions.

The ACI’s delicate equilibrium, balancing political and economic security interests, thus requires the Commission to gauge the political sensitivities and preferences of Member States, the potential for Council support or divisiveness, as well as the economic repercussions to the EU from an ACI investigation. The ACI was intended as a deterrent, and that would dissipate in the wake of public disunity, thus requiring careful Commission assessments prior to its application. The legal construction of the ACI also raises broader questions about its compatibility with WTO law – a challenge that remains central to the coherence of EU trade policy.

4 Article XXI and Institutional Incapacity

The WTO’s inability to address economic coercion stems from both its legal structure and its political design. While the Dispute Settlement System (DSS) adjudicates violations of specific trade commitments, it does not examine the political motivations behind measures. Coercion – political pressure applied through commerce – therefore falls outside its remit. As Biukovic (2023, p. 2) notes, generally, “international organizations at the multilateral and plurilateral levels have … provided no effective protection to states targeted by such measures.” The GATT was in part a response to the disaster unleashed by two world wars, and adopted under the assumption that trade and commercial interdependence promote peace (World Trade Organization, 2023a), though Farrell and Newman (2019) and Paulsen (2025) show that security concerns have always played a role in members’ approach to commerce, and states’ security concerns and economic interests were never clearly compartmentalized in the multilateral trading system. Yet, the general weaponization of trade was not a primary concern, and the invocation of Article XXI of the GATT, which permits measures for “essential security interests … in time of war and other emergency”, has largely been limited to times of war.

A 2019 WTO panel tried to narrow the scope for its invocation to armed conflict, or other crisis or instability threatening the state, and also clarified that it may not be used, for “protectionist interests that veil efforts to discriminate for domestic competitive benefits” (Paulsen, 2025, pp. 238–239). Subsequent WTO panels further limited “emergency” and “situations of a certain gravity or severity.”³ In light of these decisions, “the temporal limitation in subparagraph (b)(iii) requires evidence that an irreconcilable “emergency” of international relations occurred before [trade] actions were taken, not in anticipation of them.” (Paulsen, 2025, p. 240). Paulsen (2025) shows that while historically it was not possible to clearly demarcate between civilian and military goods (all goods could have military implications), and thus commerce and security, WTO panel reports have sought to separate the two, limiting the options for restricting trade with WTO members and for responding.

Yet its scope and justiciability remain controversial; for some members, the article is effectively self-judging (Hart, 2024; Ruys & Rodríguez Silvestre, 2022). While the WTO Secretary General believes that states themselves decide on national security questions, she also warned against a race to the bottom if states make everything a security exception (Dreyer, 2024). In 2021 the WTO Secretariat defined “resilience” as “the ability of a system, including households, firms, and governments, to prevent and prepare for, cope with, and recover from shocks” and then in 2023 equated resilience with economic security (World Trade Organization, 2023b, p. 48). Since a shock is a crisis, which allows pre-emptive steps, such an application would, in theory, allow claims of national security exceptions for a wide range of economic security reasons, thus nullifying existing limitations under Article XXI.

However, this is an institutional statement, not a panel decision or legal assessment of trade law. The GATT, including Article XXI, does not address economic crisis, nor does it address the political motivations, threats and coercion by third countries imposing commercial discrimination. Thus, the GATT, as a framework for state intervention on issues of economic security, remains unclear (Paulsen, 2025, p. 288). Bringing wider security concerns fully into WTO rules in areas beyond those limited instances covered by Article XXI would further erode the multilateral system’s foundation.

The WTO’s limitations are both conceptual and procedural. The WTO provides remedies for violations of obligations (market access, non-discrimination, etc.) but does not recognize “economic coercion” as an actionable offense. If country A imposes, say, anti-dumping duties on country B, a panel can assess compliance with WTO rules. In cases of coercion, by contrast, the effects (e.g., higher tariffs or import bans) may be litigated, but underlying the political purpose for coercion – pressuring a policy change – lies beyond the DSS’s purview. Proceedings are lengthy; appeals currently face an enforcement vacuum. The EU’s Enforcement Regulation can address blocked dispute settlement in defined circumstances, but it does not target the political motivations behind measures unless they breach specific WTO provisions.

Hence, the EU based the ACI on public international law. These general principles condemn coercive conduct that undermines sovereign autonomy even absent the use of force, while permitting proportionate countermeasures. The Commission’s 2021 Impact Assessment makes this architecture explicit: while unfair trade practices can be challenged at the WTO, politically motivated coercion often escapes legal qualification within WTO law. This is especially important given the overlap between national security and economic security, and the lack of WTO law addressing economic security (Paulsen, 2025).

In 2021, China temporarily removed Lithuanian products from its list of accepted countries for imports (delisting it as an accepted country of origin, thus also affecting goods from foreign firms established in Lithuania) after the Baltic state allowed an official Taiwanese office in Vilnius. China then also imposed secondary sanctions on firms using Lithuanian inputs, with mixed results (Fraile del Alamo and Lim, 2025). The EU eventually filed a case at the WTO in 2022, alleging illegal discrimination against imports (European Union, 2022). Nonetheless, this case illustrates how informal or indirect pressure may threaten a Member State’s autonomy without clearly breaching WTO rules, thus justifying recourse to laws and norms beyond the WTO system (Commission, 2021b).

This strategy, however, introduces legal complexity. In Opinion 2/15, the CJEU held that reliance on international law alone does not empower the Commission to suspend trade concessions or introduce rebalancing mechanisms; such powers require an internal EU legal basis (Szyszczak, 2021). The ACI supplies that basis. While its main purpose is to strengthen the EU’s economic security, as defined by the Commission (2023), its legal basis lies in public international law rather than in WTO rules, and action requires Member States’ approval. The EU cites foundational texts such as the 1970 UN Declaration on Friendly Relations and the Articles on State Responsibility, which codify the prohibition of coercion and the permissibility of countermeasures.

This allows the EU to frame actions as a defence of the international legal order; a political security approach explicitly supported by Member States through an affirmative vote, while countering economic aggression affecting the Union’s commerce (Biukovic, 2023; Ruys & Rodríguez Silvestre, 2022). The EU is simultaneously reaffirming its support for the DSS, stating that it will “use its dispute settlement system where appropriate” (ACI, recital 12). Accordingly, the ACI’s legal strategy assumes that the EU may unilaterally determine when coercion has occurred (through an affirmative vote by the Council) and adopt proportionate countermeasures under international law without a WTO filing, even though any resulting trade restriction remains challengeable at the WTO (where the Commission will have to defend the EU’s economic interests).

The ACI’s flexibility may thus invite challenges, whether EU actions proceed alongside or without WTO filings (Weiss, 2024). If a third country challenges a countermeasure at the WTO, DDS panels may consider international law in context, but it is an established view and practice that the WTO DSS and WTO countermeasures have displaced unilateral countermeasures under customary international law (aside from Article XXI) (Hart, 2024; Azaria, 2022, esp. pp. 394–95). Thus, WTO adjudicators cannot apply customary international law to excuse breaches of WTO obligations.

The EU has claimed it can simultaneously pursue cases at the slow-moving WTO and through the ACI. Yet, this could slow the ACI’s envisioned rapid responses and also render EU measures themselves challengeable. Weiss (2024, p. 220–223) argues that if the EU files a WTO case alleging a breach that is justiciable by the DSS, stemming from coercion but not the coercion itself, it must still ground its claim in GATT/GATS/TRIPS. As such, it would generally violate WTO procedure to pursue unilateral action through the ACI before a panel decision – absent limited exceptions (e.g., GATT Article XX(a), or XIV, in specific circumstances). However, Azaria (2022) argues differently, showing not only that states can take countermeasures under customary international law if a state breaches non-WTO obligations, but that doing so strengthens international law. Thus, one can imagine a case where the grounds for countermeasures under ACI is a breach of a non-WTO obligation, but the countermeasure itself may be challenged at the WTO.

Thus, the risk of a challenge to ACI countermeasures at the WTO persists, and is largely contingent on the type of countermeasure the EU adopts (Kūbeck & Mancini, 2023). One can also envision a Commission investigation without a Council vote pending a WTO panel’s decision. Here, Weiss (2024, p. 243) suggests clarifying the ACI so that only serious and grave interferences qualify as coercion, and avoid response measures where simultaneous breaches of more specific trade rules are alleged, unless a lawful WTO justification applies.

The debate on the applicability and purpose of GATT Article XXI is also a challenge. If the EU acts without a WTO panel decision, such ACI measures, as noted, might still face challenges and need to be justified and defended under the WTO’s security clause (Hart, 2024; Fernández Pons, 2022; Baetens & Bronckers, 2022; Azaria, 2022). Although panels have twice found Article XXI justiciable, the United States and several other members insist that security exceptions are self-judging (WTO, 2019, 2022; USTR, 2023). The EU, while advocating a balanced interpretation, recognizes the practical difficulty – often the impossibility – of relying on WTO procedures to address politically motivated coercion in a timely manner (European Union, 2023). Yet, the Commission also assumes that coercing states are unlikely to litigate at the WTO, as doing so would expose their own conduct to legal scrutiny (Commission, 2021b).

Further legal confusion and justification for EU actions stem from the impasse at WTO’s DSS. While the initial panel stage of the DSS functions, the appellate body of the DSS remains blocked, and no WTO agreement addresses how the “DSU [dispute settlement understanding] applies when a WTO member acts in bad faith to prevent its proper functioning” (Hart, 2024, p. 98). The EU’s revised Enforcement Regulation provides legal justification to act against a party that appeals into the void or otherwise prevents implementation or an appeal, and more generally “the rules of customary international law apply and these rules, specifically Article 52(4) of the Draft Articles on State Responsibility, permit States to impose countermeasures while a dispute is pending, if the responsible party ‘fails to implement the dispute settlement procedures in good faith’”. (Hart, 2024, p. 98). The EU may also appeal a panel decision to the Multi-Party Interim Appeal Arbitration Arrangement (MPIA), a temporary replacement for the Appellate Body erected by the EU and 17 other WTO members (30 members by July 2025), but most WTO members have not joined. Thus, the EU reserves the right to act independently when systemic constraints, institutional impasse, or the type of coercion make WTO adjudication ineffective or inappropriate.

5 Implications for the EU and the International Trading System

Within the EU’s institutional framework, the ACI provides a carefully calibrated mechanism for reconciling trade and foreign policy competences. It preserves the Commission’s role as initiator and investigator of coercion cases – under Article 207 TFEU – while entrusting the Council with the authority to determine the existence of coercion and to authorize countermeasures. This design introduces a foreign policy threshold into what is formally a trade instrument, ensuring that neither economic nor security concerns dominate, and that both supranational and intergovernmental actors retain meaningful roles.

Both the Commission and the Council possess veto powers. The Commission may decide not to initiate proceedings or may find no evidence of coercion; conversely, the Council may conclude that coercion is absent or that countermeasures are politically inappropriate. This double-veto structure reflects the political sensitivities inherent in external actions and ensures that decisions are taken with both legal robustness and diplomatic prudence.

Legally, the ACI rests on the recognition that existing WTO rules are ill- equipped to address the strategic use of economic measures by third countries seeking to influence EU policy choices. When the European Parliament called for the inclusion of anti-coercion provisions in the 2019–2020 revision of the Enforcement Regulation, the Commission rejected the idea, arguing that such measures would contravene WTO law. Instead, the EU turned to public international law, drawing on the principles of sovereignty, non-intervention, and state responsibility to justify its capacity to respond unilaterally when its core interests are threatened in a world increasingly dominated by power politics. In this context, the ACI represents the institutionalization of a securitized worldview within EU trade policy. It does not merely respond to security concerns; it embeds them within the EU’s legal and procedural structures.

The broader significance of the ACI lies in its embedding within the securitization of trade. The ACI signals the emergence of a more diverse trade- governance architecture in which regional actors experiment with new institutional designs to navigate geopolitical competition. Far from abandoning the WTO, the EU is adapting to its limitations, developing instruments that reflect its principles while recognizing that global trade is no longer insulated from power politics. As one of the WTO’s staunchest defenders (Gstöhl & De Bièvre, 2018; Commission, 2024), emphasizing legal predictability, institutionalized dispute settlement, and adherence to agreed rules, the EU insists that the ACI does not abandon this paradigm. Instead, by acknowledging the limits of WTO law in addressing the strategic use of economic instruments for political coercion and the broader transformation of global trade governance, the EU is complementing its own arsenal of tools for the purpose of upholding trade rules.

The 2021 Trade Policy Review and the 2023 European Economic Security Strategy reaffirm the importance of the WTO while recognizing an increasingly power-based environment in which national (EU) security and economic security overlap, necessitating a broader geopolitical toolbox spanning foreign, security, economic, and trade policy. In a world where global commerce is increasingly shaped by questions of power, autonomy, and vulnerability, the EU seeks to play an active role in redefining the global trading order (Weyand, 2025).

While the EU asserts that its approach is WTO compatible, the ACI exposes the limits of WTO legalism in a contested world order and contributes to a potential realignment of the multilateral trading system. In this sense, the ACI is both a product and a driver of the ongoing securitization of trade. The ACI signals that the EU is no longer willing to rely exclusively on the WTO to safeguard its interests and is prepared to redefine its trade-governance tools to meet emerging threats and even work to revise or replace the WTO (Euronews, 2025; Kohlman, 2025). The ACI fills normative and practical gaps that cannot be bridged through the WTO.

Although the EU maintains its rhetorical and substantive commitment to a rules-based order, its insistence that it has a legal right to act autonomously when multilateral institutions lack effectiveness is an assertive step to protect its economic security. It reflects a pragmatic step amidst broader global trends in which geopolitical rivalry and normative pluralism increasingly erode the universality of WTO disciplines. This may mark the beginning of a more plural legal architecture for global trade, where regional actors design their own mechanisms to compensate for the erosion of multilateral enforcement.

In that sense, the ACI is not merely a legal instrument but a normative intervention in the evolution of international economic law. The repeated invocation of public international law and consistent articulation of legal justifications could consolidate both state practice and opinio juris (Ruys & Rodríguez Silvestre, 2022). It may serve as an example of state responses to economic coercion in a world where trade is increasingly weaponized, WTO shortcomings are exposed, and reforms are stalled.

Reflecting on a larger comparative perspective, the EU’s approach remains distinct from those of the large powers such as the United States and China, reflecting the EU’s institutional complexity and its continuing aspiration to act through law and transparent procedures, while at the same time bringing the EU closer to – and in some cases shaping – the policies of these actors. Unlike the Commission under the ACI, the US executive, under Section 232 of the Trade Expansion Act of 1962 and Sections 121 and 301 of the Trade Act of 1974, enjoys very broad discretionary powers to impose trade measures based on economic and national security justifications, irrespective of WTO law (Catalfano, 2022; Irwin, 2017; Birenbaum, 2008, p. 655; Bayard & Elliott, 1994). An impetus for the ACI was US President Trump’s initiation of Section 301 investigations against EU Member States in 2018 and the EU (e.g. against France for its digital services tax, and the EU for subsidies on large aircraft), while threatening tariffs unless the EU supported America’s position addressing China’s aircraft subsidies. France has advocated that the EU adopt its own Section 301-type law since its adoption in 1974, and the ACI is a small step in that direction.

On the other hand, China’s centralized political structure and fusion of party and state also acts without institutional constraints. Its 2023 Foreign Relations Law, which explicitly authorizes measures against actions deemed detrimental to Chinese interests (including development, which includes economic interests), states in article 32 that this is based on “international law and fundamental norms governing international relations,” (not WTO law) and scholars show that the 2023 law was partly a response to the ACI, thus reflecting its reach (Guo et al., 2023; Inside US Trade, 2023; China Briefing, 2023).

6 Conclusion

The ACI demonstrates how the EU has adapted to the triangulation between economic coercion (external), securitization (internal), and the limits of the WTO. It marks a shift from a purely legalistic approach to one that acknowledges the political and security dimensions of economic interdependence. By embedding a foreign policy threshold within a trade-policy instrument, the ACI achieves something that cannot be achieved through the WTO and the multilateral trading system: it internalizes security concerns in trade.

The ACI also embodies a paradigmatic shift in the EU’s approach to external action. Conceived as a trade defence measure to fill an existing gap without crossing into the domain of sanctions policy, it responds to internal demands from both the European Parliament and key Member States for a robust and flexible mechanism to counter economic coercion. In doing so, the ACI addresses a structural weakness in the EU’s defensive capabilities at a time when economic interdependence is increasingly weaponized and when traditional foreign policy tools alone are insufficient to protect the Union’s political and economic autonomy.

As such, the ACI serves not only as a defensive instrument against economic coercion but also as a laboratory for institutional innovation in managing the trade–security nexus. It demonstrates that the EU can adapt its legal and institutional tools to an evolving international environment without abandoning its foundational commitment to a rules-based order. Whether this delicate balance can be sustained amid deepening geopolitical fragmentation remains an open question. Yet the ACI offers a compelling case study of how law, politics, and security increasingly converge in twenty-first-century trade governance.