US customs policy threatens to escalate. The EU is fighting back: there is talk of countermeasures under Regulation (EU) 2023/2675 of the European Parliament and of the Council (known as the “Anti Coercion Instrument” or “ACI Regulation”). The regulation to combat economic coercion, which has been described in the media in martial and tabloid terms as a “trade bazooka,” is considered the European Union's sharpest sword against economic coercion to date. It has not yet been applied.
European Union instruments against aggressive trade policy
The common trade and customs policy is one of the core areas of the European Union. Since the Treaty of Lisbon, it has been subject to regulation in accordance with Article 207(2) TFEU. Accordingly, every EU trade and customs policy measure requires a legal basis that must be enshrined in EU secondary law. Mild trade defense measures include the anti-dumping measures of Regulation (EU) 2016/1036 (“Anti-Dumping Basic Regulation”) and the anti-subsidy measures of Regulation (EU) 2016/1037 (“Anti-Subsidy Basic Regulation”). Both enable member states to protect themselves against price dumping and imports into the European Union subsidized by third countries through anti-dumping and countervailing duties.
In contrast, Regulation (EU) 654/2014 (“Trade Retaliation Regulation”) and Regulation (EU) 2023/2675 offer much tougher countermeasures, particularly against aggressive trade and customs policies. The EU Commission responded to the tariffs imposed by the US government on imports from the European Union last year with measures under the Trade Retaliation Regulation and corresponding amendments to the respective implementing regulations DVO (EU) 2018/886 and DVO (EU) 2020/502. Additional ad valorem duties were imposed as part of the rebalancing. The measures were temporarily suspended to allow for negotiations. However, the resulting customs pact has not yet been ratified. It is questionable whether the vote announced for next week in the EU Parliament will take place. The EU Commission's most effective means of exerting pressure in trade policy matters, the ACI Regulation, has been discussed several times but has not yet been used. As a result of the now threatened additional punitive tariffs by the US to enforce its Greenland policy, the application of the ACI Regulation has recently been discussed again with increasing frequency. There were already moves in this direction last year. So far, the German federal government, among others, has spoken out against it. The following is an overview of the mechanism of action and selected instruments. The focus is on industrial property rights and public procurement law.
Mechanism of action
The ACI Regulation provides the EU Commission with a whole range of effective instruments to respond to economic coercion by third countries. The mere existence of the Regulation acts as a deterrent. The threat of these “instruments of deterrence” prevents many third countries from pursuing an aggressive customs policy in view of the European Union's continuing market power.
If a third country applies economic coercion, the Commission may, on its own initiative or upon a duly substantiated request, order an investigation of the measures lasting up to four months, Art. 4 (1), (2) ACI Regulation. In principle, anyone is entitled to submit a request. The Commission also examines every request, regardless of how substantiated it is. However, it is likely that only requests from the governments of the member states will have a chance of success.
If economic coercion within the meaning of Article 2(1) of the ACI Regulation is involved, the EU Commission proposes an implementing act to the Council in which the existence of economic coercion is established. A period of up to six months is then set in motion, during which the EU Commission enters into dialogue with the third country. If this does not result in a solution – such as a trade agreement – and the economic compulsion continues, the EU Commission has a mandate under Article 8(1) of the ACI Regulation to prepare countermeasures. The third country is given a reasonable period of time, Article 8(1)(a) ACI Regulation. The countermeasures are then adopted as an implementing act (DVO). When choosing the response measure, the EU Commission is bound by the principle of proportionality. The entire procedure should take a maximum of ten months from the receipt of the request to the adoption of the response measures – but in individual cases, depending on the urgency, it may be considerably shorter. The response measures are lifted when the economic pressure ends, Art. 8(9) ACI Regulation.
Reaction measures: Industrial property rights
Annex I of the ACI Regulation provides a catalog of reaction measures. These include counter-tariffs and import, export, and transit restrictions. There are also a number of effective non-tariff instruments, including in particular points 4 and 7 of Annex I. Point 7 gives the EU Commission the option of adopting an implementing act
“restrictions on the protection of intellectual property rights or their commercial use in relation to right holders who are nationals of the third country concerned, which may amount to a failure to comply with applicable international obligations relating to trade-related aspects of intellectual property rights.”
Behind this cumbersome wording lies nothing more than restrictions on the patent, trademark, design, or even copyright protection of products from the third country concerned. This results in a number of restrictions for the EU Commission. This cumbersome wording simply refers to restrictions on the protection of products from the third country in question under patent, trademark, design, or even copyright law. This opens up a wide range of possibilities for the EU Commission: for example, patent protection or at least its enforcement could be temporarily suspended, patent protection periods could be shortened, licensing could be made more difficult, or sales could be prohibited. To this end, the ACI Regulation allows for temporary exceptions to the provisions of international agreements, in particular the TRIPS Agreement. The minimum standards laid down therein may be undercut, at least temporarily. The interruption or restriction of patent protection in particular can have existential consequences for a number of industries, such as the technology and healthcare industries.
The nationality of the rights holders concerned is determined in accordance with Annex II, point 4, pursuant to Article 1(3) of TRIPS and Note 1 thereto. A “national” in this sense is any “natural or legal person having a domicile or a real and effective industrial or commercial establishment in that customs territory.”
This gives rise to certain problems with the enforcement of restrictions on industrial property rights under the ACI Regulation. Economically relevant companies from third countries – in the current customs dispute, in particular US tech companies – as “global players” usually have actual commercial establishments in the territory of the European Union and are therefore considered domestic entities within the meaning of the ACI Regulation – at least insofar as they act as intellectual property rights holders. In this respect, there is a fear that a corresponding countermeasure would not always have the desired painful effect: corporations such as Apple, Meta, and the US pharmaceutical industry have large and operational branches in member states of the European Union. Insofar as these are intellectual property rights holders, this could significantly undermine the effect of measures under Point 7.
Reactionary measures: Restrictions under public procurement law
Sanctions in public procurement procedures are also gaining importance in EU trade policy. For example, the Commission regularly makes use of its “EU International Procurement Instrument” in Regulation (EU) 2022/1031 (IPI Regulation for short). If the Commission finds that a third country is creating barriers to access for EU member states on the international market for public procurement, it can respond with countermeasures. In June 2025, for example, the EU Commission issued Regulation (EU) 2025/1197, which restricted access by Chinese manufacturers of medical devices to European above-threshold procurement procedures – the Commission even imposed a total exclusion of Chinese bidders. However, it was unclear how to deal with branches and subsidiaries of these bidders within the European Union.
The ACI Regulation provides considerably clearer rules on this issue. According to Annex I, point 4,
the following measures may be adopted, which, where necessary, may be equivalent to non-compliance with applicable international obligations regarding the right to participate in public procurement procedures:
(a) the exclusion of goods, services, suppliers of goods, or providers of services from the third country concerned from public procurement, or the exclusion of tenders from public procurement where more than 50% of the total value of the goods or services originates in that third country, unless exceptional circumstances of the case require a lower percentage and the remaining percentage of goods or services is not covered by the Union's obligations under the WTO Agreement on Government Procurement or under any other agreement on government procurement concluded between the Union and a third country other than the third country concerned, or
(b) the imposition of a valuation adjustment on tenders for goods or services from the third country concerned or on tenders from suppliers of goods or services from the third country concerned.
In summary, the ACI Regulation therefore allows bidders from the third country concerned to be excluded from public procurement procedures (within the scope of EU procurement law). This applies in principle if either the bidder concerned or the total value of the procurement originates more than 50 percent from the third country in question.
The nationality of service providers is determined by Annex II, point 2(b). According to this, a legal entity is considered a service provider of a third country if a person affected by the instruments of the ACI Regulation owns or controls the respective service provider. With regard to goods, origin is determined in accordance with Regulation (EU) No. 952/2013 (“Union Customs Code Regulation”), in particular Article 60 of the Union Customs Code Regulation. According to this, the origin of a good is the country in which it was wholly obtained or manufactured. If it was produced in more than one country, the country of origin is the country in which the goods underwent their last substantial, economically justified processing or working, i.e., the last significant stage of manufacture.
This provides a powerful tool for IT procurement procedures in particular: regardless of whether the product in question is classified as a good or a service, the decisive factor will usually be either the ownership of the US parent company or the essential final processing in the US.
The second procurement law instrument of the ACI Regulation, the adjustment of bids from affected third countries, should also be mentioned. Here, too, the rules on the origin of goods and services apply. The ACI Regulation stipulates that public contracting authorities may be required by implementing regulation to reduce the scores of corresponding bidders in procurement procedures by a certain percentage. If—which is generally not recommended for contracting authorities—price is the only evaluation criterion, such an adjustment leads to a relative increase in the bid price for the evaluation, but not for the performance of the contract in the event of the award.
Conclusion: MEGA versus MAGA?
In addition to reciprocal tariffs, the ACI Regulation provides the EU Commission with a range of powerful non-tariff instruments, not least in the field of industrial property rights and public procurement law. However, as Sir Isaac Newton already stated in his third law, the principle of interaction: To every action, there is always opposed an equal reaction. If the ACI Regulation is used (“Make Europe Great Again”?), further countermeasures are therefore to be expected. In this respect, caution but also moderate strength is called for.
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