The EU’s Anti Coercion Instrument (ACI ) has effectively deterred China from large-scale politically motivated acts of trade weaponisation, according to a leading trade expert.
Dr Victor Cha, president of the Geopolitics and Foreign Policy Department and Korea Chair at the Center for Strategic and International Studies, said during a book launch last night (16 April) that the ACI – a tool that gives Brussels the power to impose strict trade restrictions in response to acts of economic aggression – has been a quiet but effective deterrent against Chinese coercion.
Delivering a lecture yesterday (16 April) at SOAS University of London, Cha characterised the ACI as an example of “collective resilience”: the ability of countries to more effectively defend themselves from economic attacks through coordinated multilateral action.
The tool illustrates how countries can work together to resist acts of Chinese economic coercion, Cha said, which have been a regular feature of the Beijing’s diplomatic playbook over the past 3 decades – with over 600 instances recorded since 1997.
No recent cases
Reflecting on conversations with officials across Europe, Cha, a former Georgetown professor, said that many diplomats believe the ACI has significantly limited the scope for Chinese acts of economic aggression against EU members.
“Nobody can cite to me a case of Chinese economic coercion on the scale of Lithuania since the announcement of the ACI,” he told attendees.
“In a sense, Europeans are actually further ahead of the US and East Asia.”
When Lithuania allowed Taiwan to open a diplomatic office in 2021, China swiftly responded with informal trade restrictions, blocking imports of Lithuanian goods and targeting supply chains that featured Lithuanian inputs. The ACI was introduced in 2023.
Cha flagged similar Chinese responses to perceived slights by trading partners, noting a campaign against Australian agricultural exports when prime minister Scott Morrison called for an independent inquiry into the origins of Covid -19.
Beijing is sensitive to any suggestion that the virus originated in a Chinese lab and was accidentally leaked – a theory that remains unproven – and responded to Morrison's suggestion by informally cutting trade with Australia.
UK plan
Currently the UK is developing its own equivalent ACI measure to protect against acts of economic coercion. As reported by Global Trade Today yesterday, Westminster has launched a call for evidence on the value of creating its own anti-coercion toolkit.
Trade minister Sir Chris Bryant told Politico that the consultation will assess whether the UK needs “additional, last-resort tools to defend against acts of adverse economic pressure”.
However, Cha stated that the value of such protections comes from strength in numbers.
Collective resilience
Cha made the point as part of a lecture to promote his new book: China’s Weaponization of Trade: Resistance through Collective Resilience, co-authored with Ellen Kim and Andy Lim.
Through research carried out using UN trade data, the authors identified “high-dependence” imports that China sources from countries it also targets with economic coercion.
He noted 18 countries, including the UK and US, which could feasibly set out a programme of collective resilience, coordinating retaliatory measures on these high-dependence imports, which would have a meaningful deterrent effect.
Cha shared the example of OLED displays, a crucial component of high-tech consumer goods like smartphones and televisions, which China sources almost exclusively from Japan.
Japan was the country with the most leverage, exporting 147 high-dependence goods to China, while the US exported 132 such goods.
The UK, he noted, only has 13 high-dependence goods. However many of them are luxury goods, like Scottish whisky, which could have a significant political impact for the Chinese Communist Party if they were to become unavailable to Chinese consumers.
“We’re used to thinking about how we’re vulnerable,” he said, “But there is a lot of leverage.”
Challenges
Cha suggested each country could select just two high-impact, high-dependence products to place exports restrictions on, rather than the full list.
However, he warned that a 'collective resilience' approach, requiring over a dozen countries to coordinate economic action against China, would still take “tremendous political will”.
The irony was also not lost on Cha that the world’s “biggest economic coercer” is now widely perceived to be the US, following the Trump administration’s widespread application of tariffs, both for protectionist and coercive reasons.
However, he added that US weaponisation of trade is a much more recent phenomenon, reiterating that China has been honing its strategy over the past three decades.
Urgency
Returning to the example of Morrison’s call for a Covid-19 inquiry, Cha noted that while Australia weathered the economic fallout – finding new export markets for sanctioned products, enjoying campaigns of support from allied partners – the political ramifications highlight the urgency of the issues.
No other nation picked up the issue of an independent investigation into the Covid-19 outbreak following China’s actions, creating “self-censure and self-regulatory behaviour”.
“This is not just about trade, it’s about order.
“If the weaponisation of trade is for the purpose of making every country, company, individual in the world defer to what they believe China’s interest is… simply for fear of punishment, that is an autocratic world order.”
