Officials now wargaming dangers of EU ‘bazooka

Story by Muiris Ó Cearbhaill  • 1d

Officials at the Department of Finance are wargaming the implications of the EU enacting the anti-coercion instrument following renewed tariff threats from the US, Extra.ie understands.

The anti-coercion instrument (ACI), which has never been used, restricts a target country’s intellectual property rights and foreign direct investment opportunities in Europe, where it threatens the security of the EU.

Dubbed a ‘trade bazooka’, it’s seen as the EU’s most powerful weapon in any trade war and could inflict billions of dollars of losses on US companies and the American economy by cutting off access to the bloc’s 450-million-customer market.

European leaders are sceptical about using it, but were set to discuss measures on Thursday following renewed tariffs threats from US president Donald Trump, before they were withdrawn after talks with Nato officials in Davos.

Finance Minister Simon Harris said yesterday that he has directed his officials to continue scenario planning, saying it is important that the Government considers every outcome.

‘We had a lot of conversations this week about the ACI, but that… is a very broad term and an instrument that has never been used,’ he said. ‘I think it is important that we give consideration to all of the various scenarios, so Ireland can continue to be as informed as possible, to make a contribution to conversations at a European level.’

It is understood the ACI’s impact on foreign direct investment and intellectual property rights – cornerstones of economic activity here – could have implications for our economy.

The economic activity of companies – primarily in the tech and pharma sector – with European headquarters in Ireland, most notably Apple, is generated from the purchase and sale of intellectual property.

The Government collects bumper corporation taxes as a result each year, which could be hit should foreign brands lose their rights in the EU.

Ireland’s favourable economic position has been stated as a positive, however, with the Tánaiste saying it would help to cushion immediate economic shocks should tariffs be imposed.

Mr Harris said yesterday: ‘This country approaches a period of geopolitical turbulence from a position of relative strength.

‘Thank God we’re living in a country with full employment. Thank God we’re living in a country with budget surpluses and we have established two long-term saving funds, and all that provides us with a degree of buffer and protection.’

He said it is a now matter for EU states to become more self-reliant, a policy priority of the European Commission.

A landmark report by former Italian PM Mario Draghi in 2024 said EU member states needed to sacrifice their relationships with and reliance on multinationals. He said European counties needed to boost productivity and scale in the EU single market to compete with economies such as the US and China.

Mr Harris said recent days have been a ‘wake-up call’ for Europe and emphasised the importance of strengthening local businesses.

‘There’ll be opportunities for Ireland to play an important role. We have to prioritise what is within our own control to ensure our own economic protection in the time ahead,’ he said. ‘A big part has to be the implementation of the National Development Plan, and acceleration of infrastructure delivery.’

The Government yesterday convened the National Trade Forum, made up of business leaders and public agency bosses, to update them on plans to mitigate against economic impacts.

Trade Minister Helen McEntee said: ‘The EU-US relationship is still our most important relationship and I don’t think that will change. The last few weeks and indeed the last few months have certainly tested that.’

https://www.msn.com/en-ie/money/other/officials-now-wargaming-dangers-of-eu-bazooka/ar-AA1USkVx?ocid=finance-verthp-feeds