On 3 December, the European Commission published a proposal aimed at strengthening economic security, focusing on enhancing the use of existing tools. This proposal comes at a time when the European Union’s economic security strategy must adapt to a geopolitical context that has significantly evolved since the Commission’s initial strategy in 2023. To address the current challenges, three main recommendations are crucial.
First Recommendation: Reducing Dependencies
The EU must prioritize reducing dependencies on critical raw materials and infrastructure, particularly in the digital and financial sectors. While the Commission has initiated efforts on critical raw materials and recognizes dependencies in financial services, digital infrastructure, and space technology, concrete policies to mitigate these dependencies are lacking. Addressing these vulnerabilities is essential for ensuring the EU’s economic resilience and autonomy.
Second Recommendation: Identifying Supply-Chain Chokepoints
The identification of supply-chain chokepoints based on reverse dependencies—points under EU control—is vital. These chokepoints can be leveraged to activate the Anti-Coercion Instrument (ACI) in a targeted manner when necessary. The recent proposal from the Commission does not adequately address reverse dependencies or provide clear guidelines on utilizing the ACI effectively. Enhancing the EU’s ability to manage these chokepoints will strengthen its economic security posture.
Third Recommendation: Employing Industrial Policy and Economic Partnerships
The EU must employ industrial policy and economic partnership tools in a coherent and balanced manner, grounded in thorough economic assessments. External partnerships are indispensable for de-risking the EU’s economy. It is crucial to avoid ‘made in EU’ instruments that could penalize partners in free trade or investment agreements. The proposal suggests implementing European preference criteria for strategic sectors and bolstering the EU’s industrial base and supply chain resilience through the Industrial Accelerator Act. However, the consistency of these proposals with international commitments remains unclear. Ensuring alignment with global agreements will be key to maintaining the EU’s economic stability and international standing.
Establishing a Council Working Group on Economic Security
While the proposal includes valuable ideas for improving economic security governance, it falls short of recommending the establishment of a Council working group on economic security. Such a group could facilitate enhanced cooperation, particularly with Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) countries, on supply chain resilience. Strengthening these partnerships would further fortify the EU’s economic security framework.
To effectively mitigate risks, the EU must adapt its instruments to the current geopolitical landscape. This involves not only identifying and addressing dependencies but also leveraging supply-chain chokepoints and fostering strategic partnerships. By doing so, the EU can enhance its economic resilience, ensure the effective use of tools like the ACI, and maintain coherence in its industrial and economic policies. These steps are essential for navigating the complex and evolving global economic environment.
