Warning to lawyers that trade wars can go global

Lawyers need to be aware that trade wars can now be global Dr Vincent Power SC (partner, A&L Goodbody) has told an ICEL webinar.

The specialist in EU and Irish antitrust, regulatory, and maritime law, was speaking at ‘Legal Instruments in EU Economic Security Toolkit’ (26 May).

The event was chaired by Philip Crowe (assistant legal adviser of Department of Foreign Affairs) who is on the ICEL members' committee.

In his opening presentation, EU sanctions envoy David O’Sullivan outlined the factors behind the current geopolitical climate.

“It's enormously difficult to predict how things are going to play out, which, of course, from an industry point of view, is a disaster,” he commented.

Tariffs

O’Sullivan identified tariffs, security and defence, technology and energy as the four areas in which interdependence has been most acutely exposed.

These are the areas in which there has been “weaponisation of interdependence”, O’Sullivan said.

The question for policymakers now is “how much interdependence you can have in these crucial areas if you are not to be completely vulnerable?”

He suggested that Europe’s response required completion of the single market and a considered use of public funds to develop industrial capacity.

Daniel Ferrie (head of sector, DG Trade and Economic Security), outlined the EU’s 2021 trade strategy, structured around three pillars:

• Openness,
• Sustainability, and
• Assertiveness.

On openness, he reported that with the provisional application of the Mercosur agreement on 1 May, and recently concluded deals with India and Australia, the EU now has 45 agreements covering 80 partners, representing close to 50% of EU trade 

Once Indonesia, India and Australia enter into force, this will extend to 83 partners covering 53% of trade.

The Paris Agreement has been included as an essential element in recent FTAs and, Ferrie added: “We've also included very very strong sustainability provisions in the recent update of the GSD schemes”.

Assertiveness instruments in the toolkit are:

• The Dual Use Regulation (2021), updated in November 2025 to include semiconductors, quantum computing and other emerging technologies,
• The Enforcement Regulation (2021), enabling suspension of concessions where trade agreements are not respected,
• The International Procurement Instrument (2022), recently applied in respect of medical devices from China,
• The Foreign Subsidies Regulation (2022), under which investigations have been launched including into wind parks in Romania and metro contracts in Portugal,
• The FDI Screening Regulation, subject to political agreement in late 2025, expected to enter into application in January 2028, expanding scope to cover indirect investment and strengthening the Commission’s coordination role,
• The Anti-Coercion Instrument (2023), which has not been invoked but was described as a significant element of the toolbox, and
• Trade defence measures — anti-dumping, anti-subsidy and safeguard — of which 241 are currently in place, with the battery electric vehicles case cited as a prominent recent example.

Monitor transactions

On outbound investment, he said that there is currently no legal framework, but that a January 2025 recommendation has prompted member states to monitor transactions in semiconductors, AI and quantum.

Results are expected imminently and will inform whether further measures are required.

He also noted that to strengthen governance, “we have designated people within the civil services of countries in the European Union that deal with economic security”.

Economic security dialogues have been established with Japan, South Korea and Canada, and that DG Trade has been renamed DG Trade and Economic Security.

Micro and macro

Dr Vincent Power framed his tips for practitioners around the need for lawyers to hold both the micro and the macro in view.

Transactions which appear routine can attract scrutiny at the highest political level, Power said.

He cited the EU-China trade deficit of €360 billion – approximately €41 million per hour – as an indication of the stakes involved.

Dr Power identified FDI screening as the area of most immediate practical consequence, citing the 2025 UMCTAD investment report which shows a doubling of FDI screening arrangements.

Although 86% of EU FDI applications are cleared, Vincent Power said conditionality, refusal and the possibility of unwinding should be built into transaction planning from the outset.

False comfort

He said, unlike merger control, FDI is not predictable and lawyers should expect conditionality and avoid giving clients “false comfort” as to outcomes.

He also recommended getting local advice.

Completion does not guarantee finality, he cautioned, citing a recent instance in which China’s National Development and Reform Commission ordered the unwinding of a completed $2 billion acquisition after staff had already relocated.

Execution risk

Vincent Power’s tips for practitioners also included:

• Execution risk is now a pricing factor,
• Know the full range of instruments: ‘Read them, read every case, start reading them again, pay particular attention to the recitals. That's where the compromises are, that's where the ambitions are’,
• Be imaginative: He gave the example of helicopters classified as dual-use goods by reason of military-grade searchlights. The solution adopted was to remove the searchlights,
• Interpret as an EU lawyer, not a common lawyer,
• Start early: Timelines of 18 months to two years should be anticipated, compared with the six-month horizon more familiar from merger control,
• Watch for reciprocity. He noted that China’s Ministry of Justice, in response to Foreign Subsidies Regulation proceedings concerning Nuctech, indicated resistance and potential countermeasures.
• Exercise caution with long-term contracts. He suggested that a 20-year supply agreement with a counterparty now subject to significant economic security scrutiny warrants careful consideration.
• Value the diplomatic service: He described an instance during the first Trump administration in which the Irish diplomatic service, with networks built over careers in Washington, Brussels, Berlin and London, aided a multinational client in a manner that proved significant.

Dr Vincent Power concluded that in this area, “EU law is amazing.

“Ireland – it's not part of a military security pact, but it is now definitely part of an economic security pact,” he concluded.