In this Briefing Paper, we look at the European Commission’s recently proposed unilateral measures for European Union trade security. Taken together, the Foreign Subsidies Regulation and the Anti-Coercion Instrument are aimed at enabling the Commission to counteract the distortive impact of ‘third country’ subsidies on EU business competitiveness; as well as to investigate and retaliate against the perceived use of economic coercion by foreign governments against the EU, its Member States and firms. While such policies may be primarily targeted at China, they would de facto apply to all third countries including Russia, the US, and the UK. While both measures would give the Commission wide discretion in their application, the Anti-Coercion Instrument would specifically allow it to bypass the World Trade Organization dispute settlement process and possible wider international law commitments. We conclude that with continuing geopolitical uncertainty for the rules-based global trade environment – compounded by the Covid-19 pandemic and the Russian invasion of Ukraine – the EU treads a careful line between the development of a specialist trade policy and a piecemeal approach in respect of the overarching restraints of Member States, international law commitments and other stakeholders’ fundamental rights.

Read Briefing Paper 70: Trade and Security: The […]

In this paper we discuss how the customs and tax benefits central to the UK Freeports policy may undermine businesses’ export opportunities. Many of the UK’s Free Trade Agreements (FTAs) contain provisions explicitly denying preferential (duty-free) access to goods which contain imported materials on which UK customs duty was not paid (known as “duty drawback bans”). But, even in the absence of duty drawback bans, the preferential status of goods manufactured in Freeports is not guaranteed. There are other ways in which goods exported from Freeports might find themselves subject to penalties, such as anti-subsidy duties (whether under WTO or FTA rules), if partner countries consider that the regime in Freeports constitutes implicit subsidisation (e.g., via tax breaks). Lastly, we highlight the diverse experience of free ports and free zones around the world.

Read Briefing Paper 69: Exporting from UK Freeports: Duty Drawback, Origin and Subsidies

In addition to the military support being given to Ukraine, efforts to halt any further Russian advancements continue to be focused on economic sanctions that aim to hamper Russia’s ability to finance the invasion. This Briefing Paper provides analysis of the pros, cons and effectiveness of current trade policy responses in terms of the short-term aim of cutting Russia’s oil rents and the long-term aim of creating a complete Energy Curtain between Russia and the West. We find that whilst current interventions may go some way in meeting the target of decoupling from Russian oil and gas, they may not be effective in the aim of impacting negatively on Russian revenues, and in the process serve to raise energy prices. While high prices on fossil fuels are beneficial for the green transition, this is only true when there are viable alternatives to fossil fuels available.

Read Briefing Paper 68: The Energy Curtain: All Eyes On Fossil Fuel Prices This Summer