On 3 December, the European Commission unveiled a proposal to enhance the European Union’s economic security by refining the application of current instruments. A recent analysis from Bruegel emphasizes that the EU must now adopt concrete risk mitigation approaches tailored to an evolving geopolitical landscape, distinct from the environment in which its 2023 strategy was formulated. The paper outlines three central suggestions.
First, the EU should work to minimize reliance on external sources for essential raw materials and key infrastructure in digital and financial domains. While progress has been made on critical raw materials and awareness exists regarding vulnerabilities in finance and digital systems, no comprehensive policy framework currently addresses these latter areas.
Second, supply chain vulnerabilities should be assessed not only in terms of EU exposure but also through the lens of reverse dependencies—points where the EU holds leverage. This insight could allow for precise activation of the Anti-Coercion Instrument (ACI), a tool designed to counter economic pressure. However, the December proposal offers limited guidance on either reverse dependencies or the operational use of the ACI.
Third, industrial policies and economic partnerships must be coordinated coherently, grounded in rigorous economic evaluation. The study stresses that international collaboration is vital for reducing risks, and warns against measures that penalize allies within free trade or investment agreements under the guise of strategic autonomy. Although the Commission intends to promote European preference in strategic industries and reinforce industrial resilience via the Industrial Accelerator Act, the compatibility of these actions with global trade obligations remains uncertain.
While the proposal introduces valuable governance improvements, it does not fully embrace recommendations such as establishing a dedicated Council working group on economic security or deepening cooperation with Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) members to strengthen supply chain robustness.
— news from Bruegel
— News Original —
What can Europe do to mitigate economic security risks?
On 3 December, the European Commission published a proposal for strengthening economic security which argues for improving the use of existing tools. Our new paper analysing the European Union’s economic security strategy and the risks it faces argues that the EU must now implement risk mitigation strategies, adapting instruments to a geopolitical context that is fundamentally different to the one where the Commission published its strategy on this topic in 2023. We make three main recommendations. n nFirst, to reduce dependencies for critical raw materials and infrastructure in the digital and financial sectors. Although the Commission has introduced an initiative on critical raw materials, and acknowledges dependencies in financial services, digital infrastructure and space technology, it has not yet announced policies to address the latter. n nSecond, supply-chain chokepoints must be identified based on reverse dependencies – chokepoints under EU control – and used to ensure that, if needed, the Anti-Coercion Instrument (ACI) can be activated in a targeted manner. The 3 December proposal has little to say either on reverse dependencies or on how to use the ACI. n nThird, the EU must use industrial policy and economic partnership tools in a coherent and balanced way based on a proper economic assessment. Our paper highlights that external partnerships are critical for de-risking, and that ‘made in EU’ instruments that penalise partners of free trade or investment agreements should be avoided. The proposal indicates that the Commission will seek to implement European preference criteria for strategic sectors and act to strengthen the EU industrial base and supply chain resilience through the Industrial Accelerator Act. However, whether these proposals will be consistent with international commitments is unclear. n nAlthough the proposal includes useful ideas to improve economic security governance, these fall short of our recommendation to set up a Council working group on economic security and to privilege enhanced cooperation with Comprehensive and Progressive Agreement for Trans-Pacific Partnership countries on supply chain resilience.