The G7’s Fear of Economic Coercion through Weaponised Interdependence – Geopolitical Competition Cloaked in International Law?

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President Zelensky’s attendance of the G7 Summit in Hiroshima (19 – 21 May 2023) was not the only significant moment of the event. Pundits have zeroed on something else, describing the summit as “a launch party for one phrase in particular: economic coercion” – China’s economic coercion. A launch party it was indeed. The G7’s position on economic coercion has since been endorsed in the Joint Statement of the EU-US Trade and Technology Council on 31 May 2023, the Joint Declaration Against Trade-Related Economic Coercion and Non-Market Policies and Practices of the governments of Australia, Canada, Japan, New Zealand, the UK, and US on 9 June 2023 as well as in the EU Economic Security Strategy unveiled on 20 June 2023. Historically, Western states have not opposed the use coercive economic measures, but the tides may be changing now that they have become targets of alleged economic coercion. This new political reality not only informs the G7, i.e. Western states’ geoeconomic strategy but may also result in a reappraisal of the lawfulness or opposability of economic coercion under international law.

The “disturbing rise” of economic coercion?

The G7 Leaders’ Statement on Economic Resilience and Security hints at China as the unspoken culprit of economic coercion. The Statement highlights the vulnerabilities of global value chains (GVCs) to “geopolitical tensions and coercion,” and asserts the existence of “a disturbing rise in incidents of economic coercion that seek to exploit economic […] dependencies and undermine the foreign and domestic policies […]” of G7 states.

Notably, the Statement mentions “attempts to weaponize economic dependencies,” a reference to “Weaponized Interdependence” (WI), a concept popularised in international relations circles, but has yet to gain much traction in international law. WI refers to a state’s ability to weaponise economic networks (e.g., GVCs) to exploit vulnerabilities arising out of mutual dependencies between states in order to compel policy change or deter unwanted actions. As such, WI can be understood as “network-based state coercion.”

On 20 June 2023 the European Commission announced the European Economic Security Strategy to ‘de-risk’ against China’s purported economic coercion. This strategy proposes a thorough assessment of risks to the EU’s economic security in four areas: risks to resilience of supply chains, critical infrastructure, technology security, and ‘weaponisation of economic dependencies or economic coercion’ – again a reference to WI. Relatedly, China’s Foreign Ministry Spokesperson stated recently that such acts of ‘decoupling’, thus disrupting GVCs through the ‘weaponisation’ of trade relations, would equally constitute economic coercion.

Indeed economic coercion has recently (re)appeared the international law discourse in  light of the EU Commission’s proposed Anti-Coercion Instrument (ACI) in December 2021. Following a political agreement between the European Parliament and Council on 6 June 2023, the Draft ACI is set to enter into force in Autumn 2023. Along with the proposed EU Critical Raw Materials Act (see previous post Crochet/Zhou), European Chip Acts, and Dual-Use Regulation (Recast), the ACI forms part of the EU’s strategy to manage its economic interdependence with China (see previous post Choer Moraes), and resulting GVCs vulnerabilities to China’s alleged economic coercion through WI. The ACI rests on the premise that certain “grave” instances of economic coercion are unlawful. As such, EU member states targeted by economic coercion of third states may take countermeasures against them (see previous posts Baetens/Bronckers, Raju). However, the unlawfulness of economic coercion has not always been a given under international law.

The lack of a “stand-alone” prohibition of economic coercion under international law

There is no explicit prohibition of economic coercion under international law. The consensus is that the prohibition on the use of force under Art. 2 (4) UN Charter only encompasses military not economic force. (Brownlie, Farer, Gordon, Tzanakopoulos, Carter, Porotsky). The debate on economic coercion dates back to the San Francisco Conference, where Brazil’s proposal to include the threat or use of economic measures under Art. 2(4) UN Charter was rejected by a vote of 26 to 2. Similarly, Latin American states’ proposal for the inclusion of “economic aggression” into UN GA Resolution 3314 on the Definition of Aggression was also rejected.

To counter these exclusions of economic coercion from the definition of the use of force and aggression, between the 1960s-1980s developing states formed the Non-Aligned Movement to pass a number of declarations and resolutions before the General Assembly. Resolutions such as the 1965 Declaration on the Inadmissibility of Intervention, 1970 Friendly Relations Declaration, and Resolution 42/173 on Economic Coercion, aimed at condemning the interference in the sovereign affairs of any state through the use of coercive economic measures. These were seen as attempts to interpret the principle of non-intervention in Art. 2 (7) UN Charter as including a norm prohibiting economic coercion. However, there has not been any prevailing acceptance that these resolutions reflect a customary prohibition of economic coercion (Carter, Porotsky, Cameron)

Notably, in Nicaragua the ICJ, referring to the customary principle of non-intervention as embodied in the UN Charter and the Friendly Relations Declaration (para. 202), held that “Intervention is wrongful when it uses methods of coercion in regard to such choices, which must remain free ones. The element of coercion […] defines, and indeed forms the very essence of, prohibited intervention.” Accordingly, measures of economic coercion are only unlawful if they constitute an inference into another state’s domaine réservé. However, the Court stopped short at defining the “elements of coercion.” It only notes that such “elements” would be “particularly obvious in the case of an intervention which uses force [directly or indirectly].” (para. 205)

Specifically, Nicaragua complained of the US’s economic measures encompassing cessation of economic aid, 90% reduction of sugar imports, a trade embargo, and blockage international loans to Nicaragua. The Court concluded that such measures could not amount to, as Nicaragua argued, a “systematic violation of the principle of non-intervention” (para. 244), without providing any concrete reasoning as to why the Court was “unable to regard such action on the economic plane as […] a breach of the customary-law principle of non-intervention” (para. 245). Thus, international law scholars have called into question whether the Court’s approach in determining unlawful economic coercion is potentially limiting, if the most severe economic actions that could be taken against a state, such as those taken by the US against Nicaragua, could not be considered as a violation of the prohibition of non-intervention.

Given that the unlawfulness of economic coercion is tied to the principle of non-intervention, there is no “stand-alone” prohibition of economic coercion under international law. The contemporary view is that there is no “essential and irreducible freedom from economic coercion” in any meaningful sense under the current international law framework.

One state’s economic coercion is another’s geoeconomic strategy?

The G7’s new-found concern over the threat of economic coercion to the “international order” ironically stands in contrast with Western states’ exclusion of economic coercion from the prohibition of the use of force, and selective understanding that economic coercion only violates the prohibition of non-intervention under limited circumstances. When Western states last fell victim to economic coercion during the 1973 OPEC Oil Embargo, international law scholars tended to argue that Western sanctions against Arab states were justified, as the latter had engaged in unlawful economic coercion (Dempsey, Boorman, Paust/Blaustein). This position seems not all that different from the current policy rationale against China’s economic coercion reflected in the EU’s Draft ACI. Similarly, in its Statement the G7 has announced the launch of the “Coordination Platform on Economic Coercion” to facilitate a collective “response” against economic coercion.

It would nonetheless be reductive to disregard the G7’s concerns over economic coercion as merely Western double standards. This spotlight on the issue of WI allows the international law community to rethink the unlawfulness of economic coercion, and thus the need for its prohibition. Both the G7 Statement and the EU Draft ACI reinforce the current international law understanding of economic coercion. The G7 Statement asserts that the use of economic coercion “infringes upon the international order centered on respect for sovereignty” and that strategies of WI “undermine the foreign and domestic policies”, thus choices within a state’s domaine réservé.  Art. 2 (1) of the ACI Draft Regulations provides that the ACI applies if the third state’s measures “interfer[e] in the legitimate sovereign choices” of EU member states. The elements constituting “coercive measures” are defined in Art. 2(2), which include, intensity, frequency, magnitude (lit. a leg cit), pattern of interference (lit. b), and extent of encroachment on a member state’s sovereignty (lit. c).

It thus appears that the threats of the exploitation of vulnerabilities posed by WI may have shifted Western states’ position closer to that of developing states of the Non-Aligned Movement of the 1960s-1980s, whose efforts to pass resolutions on economic coercion before the General Assembly were not deemed as reflective of a customary prohibition of economic coercion. Scholars instead have maintained that these attempts could merely be evidence of opinio iuris of states that could eventually lead to the development of such a customary prohibition (Barrie, Bowett, Lillich, Farer).

In this light, the G7 Statement, its endorsement in subsequent governmental statements and the EU Economic Security Strategy, along with the EU Draft ACI could be evidence of opinio iuris that economic measures, esp. pursued as part of a strategy of WI, can be coercive. In essence there is an interference with matters within the domaine réservé by virtue of WI’s core aim of exploiting vulnerabilities arising out of mutual dependencies between states to compel the targeted state to policy change or a certain course of action. This acceptance of the opposability of economic coercion by Western states in addition to developing states’ support of previous UN GA resolutions on economic coercion could reflect that now a generality of states consider the prohibition of economic coercion as a form of intervention to be binding.

This notwithstanding, the G7’s presumption that any economic coercion through WI could potentially constitute an unlawful intervention may not be so clear cut. Despite the presumed harm caused by WI, not all economic coercion following the WI logic would amount to a prohibited intervention. The G7’s contention seems to be that economic interdependencies in international trade rather than encouraging mutual gains, incentivises states to exploit mutual vulnerabilities. Economic coercion as defined by the G7 arises out of geopolitical competition that employs strategies of WI within GVCs, particularly critical technologies GVCs. Two often-cited example are China’s suspension of exports on rare earth elements  (REE are vital components for consumer electronics, new technologies, and defense systems) to Japan, the US, and EU, and the US export controls on advanced computing and semiconductor manufacturing items to China.

The REE and semiconductor export controls are not necessarily interferences in the other state’s domaine réservé, which renders economic coercion a prohibited intervention. While they indeed seek to constrain the other state’s economic conduct, they do not seek to achieve the “subordination of the sovereign will” – a requirement of unlawful coercion. WI deployed between geopolitical rivals aims to secure a strategic advantage for the state itself, while also to undercut the competitive and innovative edge of the adversary state. To this end, often it would not even be necessary for a strategy of WI to achieve an interference in internal affairs that subordinates a state’s sovereign will.

Rethinking economic coercion as “anti-competitive” instead of “interventionist” conduct?

This specific dynamic of WI as geoeconomic competition and its potentially corrosive effects on GVCs challenge the current international law understanding of the unlawfulness of economic coercion being tied to the prohibition of non-intervention. Whilst the latter protects the sovereign will of a state, it does not account for the “fair play” demands implicit in the G7’s Statement. For all its references to threats against the “international order centered on respect for sovereignty,” at the core of the G7’s concern is the threat to their economic competitiveness.

In this light, we might have to move away from understanding economic coercion as just a matter of intervention. Accordingly, future international law rules on economic coercion could draw from analogies of  domestic competition law principles against anti-competitive practices and abuse of dominance. The G7’s understanding of economic coercion in context of WI sheds light on the tendencies of states in a dominant position over important chokepoints of an economic network to leverage this position over both allies and adversaries to exploit vulnerabilities created by interdependence of states in economic networks, such as GVCs.

The WTO regime could be an apt legal framework, where such a norm prohibiting “anti-competitive” behaviour could emerge. Scholars writing in the 1970s, critiquing the “vague” notion of coercion, have suggested that developments of international trade law would render recourse to a prohibition of economic coercion unnecessary, as “coercive tactics are no longer resorted to or, more likely, because the conduct in question will be characterized as ‘fair’ or ‘unfair’ under the rules of a general mechanism for regulating trade.” (Bowett, Lillich, Joyner)

While there is no stand-alone prohibition of economic coercion under general public international law, contemporary international trade law scholarship has considered with economic coercion as WTO law violations. (Hopewell, Czapnik/Mercurio, Harrell/Rosenberg/Saravalle) Specifically, China’s aforementioned REE export restrictions were held by the WTO Dispute Settlement Body (DSB), and affirmed by the Appellate Body, to be in violation of obligations to not impose quantitative restrictions under Art. XI GATT. Similarly, China has recently instituted consultations before the DSB in December 2022 over the US semiconductor export ban, complaining of violations under Art. XI GATT.

The “Great Power Competition” as embodied by the USA–China technology and trade war has led to the  securitisation of economic policy  and weaponisation of trade, such that the (unilateral) use of coercive economic measures necessarily implicates WTO rules. The G7 Statement explicitly mentions “joint efforts” at the WTO along with the newly proposed Coordination Platform on Economic Coercion as responses to economic coercion. The link between states’ current understanding of economic coercion as a violation of the non-intervention principle as well as a violation of the rules of the multilateral trading system can be seen in the EU Draft ACI’s rationale. One of the drivers for the ACI was circumventing the ongoing deadlock at the WTO Appellate Body. Thus, the ACI was designed such that EU member states could have recourse to countermeasures outside of the WTO framework.

The current WTO law does not provide rules on unfair trade that includes the abuse of dominance and similar anti-competitive behaviour. The WTO framework promoting “fair competition” only considers two specific practices of dumping (Art. VI GATT) and certain forms of subsidies (Art. XVI GATT) as unfair trade practices. However, states’ WI strategies go beyond the mere instrumentalisation of trade policies in violation of WTO trade rules on trade barriers and restrictions. It is not the trade restriction per se that is of concern. If a state, esp. one in a dominant position or controlling an economic chokepoint, pursues a strategy of WI, it employs tools of economic statecraft, e.g. trade regulations, with the aim of choking off economic flows to exploit vulnerabilities of other states in the same network. The current WTO only accounts for the tools, i.e., “means” of economic statecraft potentially in violation of fair and free trade; however, it does not yet address the “method” in which states wield such means, i.e., to exploit states’ vulnerabilities arising out of the geoeconomic dynamics of power asymmetry and interdependence in the economic networks.


The G7’s position on economic coercion essentially addresses the perceived sabre-rattling, i.e. anti-competitive, behaviour arising out of geoeconomic competition with adversary states that the G7 is “seriously concern[ed]” to find itself engaged in. To adequately capture this WI dynamic, rules against economic coercion should not only be anchored in general public international law as part of the current understanding of unlawful economic coercion as a violation of the principle of non-intervention, but also in the WTO framework, under which rules against anti-competitive behaviour and abuse of dominance could be developed. Such fair competition rules may be necessary to address economic coercion enabled by weaponised interdependence and the corrosive effects it has on not just economic competitiveness of states but also more generally on their interdependent economic coexistence in the international community.

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Hanh Hoang says

June 22, 2023

Very Good

Dan Joyner says

June 22, 2023

A very good and thought provoking piece. As someone who has thought about counterproliferation oriented sanctions for a long time, I found the G7 statement on economic coercion to be particularly non-self-aware. Western led economic and financial counterproliferation sanctions on Iraq, Iran, North Korea, and others have met all of the elements of economic coercion, in violation of the principle of nonintervention iterated in the Nicaragua case. They have also in many cases arguably violated principles of human rights law. But now that the tables have begun to turn, they are aghast that anyone would try to use economic coercive measures against them.