The increasing use of measures of economic coercion by China
has caused its trading partners to review their close trade ties with that
country as well as their ability to resist such pressure. In December 2022, the
European Union (EU) requested that the World Trade Organization (WTO)
adjudicate its dispute with China regarding restrictive trade measures China
had imposed on Lithuania in response to its foreign policy actions that were
not to China’s liking. The EU also drafted new legislation – the Regulation of
the European Parliament and of the Council on the Protection of the Union and
its Member States from Economic Coercion by Third Countries – to deter third
countries from applying coercive measures that target the EU and its Member
States. This paper considers the new instrument in the context of the EU’s
evolving ‘economic de-risking’ strategy on China and a wide range of measures
aimed at protecting the common market from the unfair behaviour of China and
other states and reducing the EU vulnerability vis-à-vis economic and security
threats. The EU’s ability to deter states from applying coercive measures
against it hinges upon its ability to strengthen its market power and to use
the new instrument when necessary.