The Anti-Coercion Instrument

Economic sanctions are increasingly wielded as geopolitical leverage, even against the EU. The Anti-Coercion Instrument (ACI) strengthens the EU's capacity to counter such threats by deterring them through credible threads of economic countermeasures and responding with its own trade restrictions if necessary. WIFO calculations demonstrate the diverse, including unintended, effects of such sanctions and countersanctions using a case study involving China. The success of the ACI will predominantly be assessed by its deterrence capabilities. The strength of the EU Single Market, as well as the determination and unity of EU actors in implementing the ACI, will be crucial. The ACI paves the way for accelerated and more transparent decision-making processes, as well as more structured procedures within the EU. However, credible deterrence of coercive measures against the EU also requires careful, model-based selection and sizing of threatened response measures.