Economic Security in the European Union: From Free Trade to Strategic Autonomy

To what extent does the European Union’s economic security strategy represent a transformation of the traditional free trade model, rather than an adaptation to new geopolitical dynamics?

Abstract

Recent literature identifies economic security as one of the main issues in the European Union's contemporary political and economic debate. Farrell and Newman´s concept of weaponized interdependence shows that global economic networks are not politically neutral and may create asymmetric dependencies that can be used as instruments of geopolitical influence. In contrast, Bradford´s concept of the Brussels Effect highlights the EU´s capacity to shape international economic governance through its regulatory power and market size. Together, these perspectives show that the EU is both vulnerable to strategic dependencies and capable of influencing the rules of the global economy.

This article examines whether the European Union´s economic security strategy represents a transformation of its traditional free trade model or an adaptation to new geopolitical dynamics. It argues that the EU is not abandoning free trade, but is redefining its economic model through Open Strategic Autonomy and de-risking. The Union seeks to preserve an open and interconnected economy while reducing vulnerabilities in critical sectors such as energy, advanced technologies, semiconductors and critical raw materials.

The analysis also considers the ambiguity between legitimate de-risking and protectionism. Although measures such as investment screening, export controls and industrial support may strengthen resilience, they could also restrict competition and protect European industries if applied too broadly. The article concludes that the EU´s strategy is best understood as an adaptation with significant transformative effects: it maintains openness and international cooperation, but changes the priorities and investments through which European economic governance is organised.

1. Introduction

For several decades, the European Union (EU) promoted an economic model based on free trade, open markets and strong participation in global value chains. Economic openness was generally understood as one of the main drivers of growth, competitiveness and international cooperation. The gradual liberalisation of trade, combined with the strengthening of multilateral institutions such as the World Trade Organization (WTO), reflected the assumption that economic interdependence could contribute not only to prosperity but also to political stability. From this perspective, the expansion of trade and investment relations was expected to create mutual benefits and incentives for cooperation between states. This approach became one of the defining characteristics of the European integration project and of the EU’s external economic policy (European Commission, 2021; Meunier & Nicolaïdis, 2019).

The European Union’s trade policy was therefore traditionally based on the idea that economic integration could reduce barriers between states and create common interests. The Single Market, the expansion of trade agreements and the development of global supply chains were considered important instruments for strengthening European economic performance. In addition, the EU’s influence was not limited to the exchange of goods and services. Through trade agreements and regulatory cooperation, the Union also attempted to promote environmental protection, labour standards, human rights and sustainable development internationally. The European Commission continues to describe the EU’s trade strategy as open, sustainable and assertive, while linking the concept of Open Strategic Autonomy to the preservation of openness alongside the protection of European interests.

However, the international environment has changed considerably during the last decade. The COVID-19 pandemic exposed the fragility of highly concentrated global supply chains and demonstrated that excessive dependence on external suppliers could affect the functioning of European industries, public services and health systems. Shortages of medical equipment, pharmaceutical products and other essential goods revealed that global interdependence did not always guarantee security or reliability. Instead, the crisis showed that disruptions in one part of the world could rapidly affect production and consumption across the European Union.

Shortly afterwards, Russia’s invasion of Ukraine revealed the strategic risks associated with dependence on a single supplier, particularly in the energy sector. The European energy crisis demonstrated that economic relationships could be used for political pressure and that commercial dependence could have direct consequences for national and European security. At the same time, the intensifying technological and economic rivalry between the United States and China highlighted the geopolitical importance of semiconductors, artificial intelligence, digital infrastructure, critical raw materials and other advanced technologies. These developments challenged the traditional assumption that economic openness automatically produces security and resilience. Instead, recent crises have demonstrated that global interconnectedness may also create vulnerabilities that can be exploited for political or strategic purposes. Economic relationships are not always neutral, because dependencies can give powerful actors the ability to exert pressure on others.

As a consequence, the European Union has progressively incorporated the concept of economic security into its political and economic agenda. This does not mean that the EU intends to abandon free trade or withdraw from the global economy. Rather, it seeks to reconcile economic openness with the protection of strategic interests. In this new context, competitiveness, resilience and security have become increasingly interconnected. A competitive economy requires access to global markets, but it also needs the capacity to respond to external shocks, diversify suppliers and protect critical technologies. The adoption of the European Economic Security Strategy in June 2023 represents the clearest expression of this policy evolution. The strategy does not propose economic isolation or the complete rejection of globalisation. Instead, it establishes a framework for assessing and managing risks in a proportionate, targeted and coordinated manner, while maintaining the European Union as an open and attractive destination for trade and investment (European Commission. 2023).

This transformation has generated an important academic and political debate. Many scholars argue that stronger economic resilience has become essential in an increasingly fragmented geopolitical environment. From this perspective, the EU cannot continue relying on the assumption that commercial interdependence will always be peaceful or mutually beneficial. Other scholars and policymakers, however, question whether the growing emphasis on security could weaken the principles of openness that have traditionally characterised European trade policy. Economic-security concerns may sometimes be used to justify broad industrial subsidies, trade restrictions or investment controls that primarily protect European firms from international competition. Excessive protectionism, poorly designed industrial policies or the politicisation of the trade could reduce efficiency, increase costs and damage the multilateral system. The central issue is not necessarily whether Europe should choose between openness and security, but rather how both objectives can be combined. This article asks: to what extent does the European Union´s economic security represent a transformation of the traditional free trade model, rather than an adaptation to new geopolitical dynamics? It argues that the EU is not abandoning free trade, but is redefining the conditions under which economic openness can remain sustainable. Through Open Strategic Autonomy and de-risking. the Union seeks to preserve an open and interconnected economy while reducing vulnerabilities linked to strategic dependencies. This article analyses this tension by examining the development of Open Strategic Autonomy, the role of strategic dependencies and the policy instruments adopted by the European Union to reconcile economic openness, competitiveness and security. It focuses particularly on the European Economic Security Strategy and on the use of de-risking as a way of reducing vulnerabilities without abandoning international economic integration. It also considers the risk that economic-security measures could develop into broader protectionist policies, thereby weakening the openness that the EU seeks to preserve.

The article argues that the EU´s current approach is best understood as an adaptation with significant transformative effects. It preserves the general orientation towards openness, international trade and cooperation, but changes the priorities and instruments through which openness is governed.

2. From Free Trade to Economic Security: Interdependence, Power and Strategic Autonomy

The traditional European economic model was largely built upon the assumption that the expansion of international trade would generate mutual economic benefits while also reducing the probability of political conflict. From this liberal perspective, economic interdependence was seen as a stabilising force: countries connected through trade, investment and production networks were expected to develop shared interests and stronger incentives to avoid confrontation. European trade policy therefore focused on market liberalisation, regulatory convergence and the expansion of free trade agreements. The removal of tariffs and non-tariff barriers, together with the development of global value chains, was expected to improve efficiency, lower costs, expand consumer choice and support economic growth. This model also allowed the European Union to use trade agreements and regulatory cooperation to promote wider objectives, including labour rights, environmental standards and sustainable development (European Commission, 2021; Meunier & Nicolaïdis, 2019). However, the growing complexity of global production networks has challenged the assumption that interdependence is automatically beneficial or politically neutral. Globalisation has created relationships in which some states, firms and institutions occupy more central positions than others. These asymmetries can generate strategic power because access to key infrastructure, technologies, resources or financial networks is not equally distributed.

Farrell and Newman’s concept of weaponized interdependence provides an important framework for understanding this development. They argue that states located at central points within global financial, technological and communication networks may be able to use those networks to monitor, restrict or influence other actors (Farrell and Newman, 2019). Interdependence can therefore create cooperation, but it can also create leverage. A country that depends heavily on one supplier, one technology or one financial network may have limited room for political manoeuvre if that relationship is threatened or deliberately exploited. This perspective has become increasingly relevant for the European Union. The COVID-19 pandemic revealed vulnerabilities in the supply of medical equipment and pharmaceutical products, while Russia’s invasion of Ukraine exposed the strategic risks connected to energy dependence. Technological competition between the United States and China has also demonstrated that semiconductors, artificial intelligence, quantum technologies and digital infrastructures are strategic assets with economic, military and political implications. These developments have encouraged the EU to treat certain dependencies not simply as commercial issues, but as possible risks to economic security.

At the same time, the EU is not only a vulnerable actor within global networks. Bradford’s concept of the Brussels Effect highlights the Union’s capacity to influence international economic governance through the size of its market and its regulatory power. Multinational companies frequently adapt their global practices to EU standards because operating under one regulatory system may be more efficient than maintaining separate rules for different markets. Through regulation in areas such as competition, data protection, consumer safety and environmental standards, the EU can therefore shape economic behaviour beyond its borders (Bradford, 2020). Together, these two perspectives explain the EU’s current position. Farrell and Newman show why the Union needs to reduce excessive dependencies and protect itself against economic coercion. Bradford demonstrates that the EU can also use its regulatory capacity to shape the environment in which global economic relations take place. The EU’s response is therefore not to reject international interdependence, but to manage it more strategically. This shift is visible in the move from an approach based mainly on market openness towards a model of managed openness. The concept of Open Strategic Autonomy expresses this change. As defined in the European Commission’s 2021 Trade Policy Review, it concerns the EU’s ability to make its own choices and shape the world through leadership and engagement while remaining open to international trade and cooperation (European Commission, 2021). The objective is not self-sufficiency, but the capacity to act independently when necessary. The European Union has translated this approach into concrete policy instruments. These policies are important because they demonstrate that economic security is no longer only a rhetorical concept; it is influencing industrial, trade and investment policy.

The European Chips Act is one example. It seeks to strengthen Europe’s competitiveness and technological capacity in semiconductors, while improving the monitoring of semiconductor value chains and the EU’s capacity to respond to shortages or disruptions. In this way, the Act modifies the traditional approach to market openness: semiconductor production is no longer treated only as an ordinary industrial sector, but as a strategic capability linked to economic resilience and technological sovereignty.

The Critical Raw Materials Act provides a second example. The EU’s green, digital and defence sectors depend on materials that are often extracted, processed or controlled outside Europe. The Act aims to improve supply security by increasing domestic extraction, processing and recycling capacity, while also diversifying imports and developing strategic partnerships. It sets 2030 benchmarks of 10% of annual EU needs for extraction, 40% for processing and 25% for recycling, and states that no more than 65% of annual EU needs for a strategic raw material should come from a single third country at any relevant stage of processing. This policy does not eliminate trade; rather, it attempts to prevent the risks associated with excessive dependence on a single supplier.

A third example is the EU framework for screening foreign direct investment. The framework does not prohibit foreign investment in general, which remains important for growth and innovation. Instead, it allows Member States and the Commission to examine investments that may affect security or public order, particularly when they concern critical infrastructure, technologies, energy, data or strategic assets. The policy therefore changes the traditional assumption that all foreign investment should be evaluated primarily in terms of economic efficiency. Investment is increasingly assessed through both an economic and a security lens.

These instruments show how the relationship between openness and security is changing. The EU continues to rely on trade, investment and global production networks, but it is increasingly willing to intervene when those relationships create excessive strategic vulnerabilities. The transformation is therefore not a complete rejection of the liberal economic model. Rather, it is a move towards a more selective and politically aware form of openness. This evolution also raises an important question about the boundary between strategic resilience and protectionism. Support for domestic semiconductor production, diversification of critical raw-material supply or screening of foreign investment can be justified when they address clearly identifiable risks. However, if such measures are extended too broadly, they may protect European industries from competition without responding to a genuine security threat. The legitimacy of the EU´s economic-security agenda therefore depends on whether its measures remain targeted, evidence-based and proportionate.

The European Economic Security Strategy discussed in the next section, provides the broader framework through which the EU seeks to coordinate these policies. It brings together the objectives of competitiveness, protection and international partnership, illustrating how economic governance has become increasingly connected to geopolitical risk management.

3. The European Economic Security Strategy

The European Economic Security Strategy, adopted by the European Commission in June 2023, represents an important development in the EU’s approach to economic governance. It responds to the vulnerabilities exposed by the COVID-19 pandemic, Russia’s invasion of Ukraine and growing geopolitical tensions. These events demonstrated that economic dependencies can create not only commercial risks but also political and security vulnerabilities. However, the strategy does not propose economic isolation or the abandonment of international trade. Its objective is to preserve the benefits of an open economy while reducing excessive dependencies and protecting the EU’s long-term competitiveness. In this sense, it follows the logic of Open Strategic Autonomy, which seeks to strengthen the EU’s ability to make independent decisions while maintaining international cooperation and participation in global markets (European Commission, 2021).

The strategy is based on three interconnected priorities. First, the EU aims to promote its own competitiveness by strengthening the Single Market, supporting innovation and investing in its scientific, technological and industrial base. This is important because competitiveness is also considered a form of economic security. A stronger internal economy is less vulnerable to external pressure and better able to respond to disruptions in global supply chains.

Second, the EU seeks to protect itself from economic security risks through existing policies and targeted new instruments where necessary. These measures may include foreign investment screening, export controls, the protection of critical technologies and actions to strengthen important infrastructure and supply chains. The Commission stresses that these measures should be proportionate and precise in order to avoid unnecessarily damaging the European and global economy.

Third, the EU intends to partner with the broadest possible range of countries that share its concerns or have common interests in economic security. This reflects the fact that the EU cannot eliminate all external dependencies through domestic production. Instead, it must diversify suppliers, strengthen trade agreements, cooperate with international partners and support the rules-based economic order, including multilateral institutions such as the World Trade Organization.

The importance of this framework lies in the way it connects competitiveness, protection and cooperation. The European Union is not replacing free trade with general protectionism. Rather, it is attempting to make openness more resilient by identifying the dependencies that could create serious risks. Therefore, the strategy can be interpreted as an adaptation to geopolitical change that nevertheless transforms the priorities and instruments of European economic policy.

4. De-risking and the Risk of Protectionism

The European Economic Security Strategy is closely connected to the concept of de-risking. This approach seeks to reduce specific and excessive vulnerabilities without ending international economic integration. It is therefore different from economic decoupling, which would involve a much more extensive separation between economies.

According to Pisani-Ferry, Weder di Mauro and Zettelmeyer (2024), the EU should focus on identifying dependencies involving a limited number of critical products for which a disruption in supply would create particularly serious consequences. The main response should be diversification of suppliers while maintaining the highest possible level of trade integration in other areas. This approach is important because not every dependency represents a security threat. Modern economies are necessarily interdependent, and attempting to produce every good domestically would be economically inefficient. The main problem arises when a dependency is concentrated in a critical sector, difficult to replace or controlled by a partner that could use economic relations for political pressure.

In practical terms, de-risking can involve diversifying import sources, developing alternative suppliers and trade partnerships, strengthening European industrial and technological capacity, improving the resilience of forms and supply chains, and protecting the EU against economic coercion or disruptions affecting trade, investment and finance. It can also require a deeper and more flexible Single Market, allowing European companies to adapt more quickly to external shocks. However, diversification alone is not sufficient if the European economy remains vulnerable to other forms of pressure. Pisani-Ferry and his co-authors argue that de-risking must be combined with broader resilience policies, including stronger internal capacity and mechanisms capable of responding to shocks affecting imports, exports, investment or financial relations (Pisani-Ferry, Weder di Mauro and Zettelmeyer, 2024). This creates a tension between efficiency and security. The traditional free trade model prioritised specialisation, lower costs and access to the most efficient suppliers. De-risking may require maintaining alternative suppliers even when they are more expensive, increasing strategic reserves or supporting domestic industries that would not necessarily be competitive under normal market conditions. Economic-security policies may therefore create additional costs for European consumers and companies. These costs may be justified when they reduce the possibility of severe disruption in sectors such as energy, semiconductors, pharmaceuticals or critical raw materials. However, the central question is not simply whether resilience is valuable, but how much resilience is necessary and how much economic efficiency the EU is willing to sacrifice in order to achieve it.

This question becomes particularly important when considering the boundary between legitimate de-risking and protectionism. De-risking is most defensible when it addresses a clearly identifiable vulnerability, such as a highly concentrated supply chain for an essential product, a critical technology with security implications or a dependency that could be used for economic coercion. In these cases, policies such as diversification, investment screening or support for domestic capacity may improve resilience without rejecting international trade. Nevertheless, economic-security concerns may also be used to justify measures that primarily protect European firms from international competition. Subsidies, trade restrictions, public procurement rules or investment controls can support resilience, but they can also reduce competition and create tensions with trading partners if they are applied too broadly. If almost every important industry is treated as strategic, economic security may become a general justification for industrial protectionism rather than a targeted response to genuine risks. The European Commission argues that economic-security measures should remain proportionate, precise and targeted. This principle is essential because the EU’s economic model still depends on international trade, external investment and participation in global value chains. A broad or poorly defined security agenda could increase costs, encourage retaliation from trading partners and weaken the multilateral economic system that the EU continues to support.

Economic security has therefore become a cross-cutting policy objective. It is no longer limited to trade policy, but affects industrial strategy, energy policy, digital regulation, research and innovation, foreign investment and external relations. Supporting European semiconductor production may strengthen competitiveness and reduce dependence on external suppliers, but it may also require public subsidies, coordinated investment and restrictions on sensitive technology transfers. Similarly, diversifying energy supplies may improve security, but it can require new infrastructure and create tensions between short-term affordability and long-term resilience.

The EU’s approach consequently differs from both unrestricted globalisation and complete protectionism. It accepts the economic value of international integration, but it also recognises that markets operate within a geopolitical environment. The key issue is whether the EU can reduce genuine strategic vulnerabilities without turning economic security into a broad and permanent rationale for limiting competition and trade.

5. Adaptation or Transformation?

The central research question asks whether the European Union’s economic security strategy represents a transformation of the traditional free trade model or an adaptation to new geopolitical dynamics. The evidence suggests that it is both, although it is primarily an adaptation at the level of the EU's overall economic orientation. The strategy remains an adaptation because the EU has not abandoned the main principles of economic openness. International trade agreements, foreign investment, multilateral cooperation and access to global markets continue to be central to the European economy. The EU is not pursuing complete economic self-sufficiency, nor does it seek to eliminate economic relations with countries that have different political systems or strategic interests. Instead, it aims to identify the dependencies that create the greatest risks and manage them through diversification, regulation, domestic capacity-building and international partnerships.

The European Economic Security Strategy frames this approach as a way of assessing and addressing risks in a proportionate, precise and targeted manner while preserving the EU’s position as an open and attractive destination for business and investment. The emphasis on international partnerships and cooperation with a broad range of countries demonstrates that the EU’s objective is not economic isolation. At the same time, the strategy has transformative effects because it changes the assumptions underlying European trade policy. Economic interdependence is no longer interpreted only as a source of mutual benefit, efficiency and cooperation. It is also understood as a possible source of pressure, vulnerability and geopolitical influence. As a result, the EU increasingly treats industrial capacity, technological leadership, resilient supply chains and access to critical raw materials as strategic capabilities rather than purely economic assets.

This transformation can be seen in the policy instruments discussed earlier. The European Chips Act treats semiconductor production as a strategic capability connected to technological sovereignty and supply-chain resilience. The Critical Raw Materials Act treats access to key resources as a question of security of supply, not only commercial efficiency. The FDI Screening Framework adds a security dimension to the assessment of foreign investment. Together, these instruments show that the EU is increasingly willing to intervene in markets when economic relationships create excessive strategic vulnerabilities. The shift is therefore not a rejection of the liberal economic model, but a move towards strategic openness. The EU is attempting to preserve the benefits of globalisation while placing limits on dependencies that could threaten its decision-making autonomy. At the level of policy instruments and strategic priorities, there has been a significant change: trade, industrial policy, technology policy and foreign policy are now more closely connected than in the traditional free trade model.

However, the transformation remains incomplete and contested. The EU’s approach will depend on whether its measures remain focused on demonstrable risks rather than becoming a broader form of industrial protection. If economic-security concerns are applied too widely, the distinction between strategic resilience and protectionism may become increasingly difficult to maintain. The EU is therefore developing a hybrid model. It is neither a purely liberal free trade system nor a protectionist model based on self-sufficiency. It is an open economy that increasingly uses strategic planning to manage global interdependence. The most accurate conclusion is that the strategy represents an adaptation with significant transformative effects: it preserves the general orientation towards openness but changes the priorities and instruments through which openness is governed.

6. Conclusion

The European Union’s economic security strategy shows that economic openness is no longer understood only in terms of market access and efficiency. It is increasingly linked to resilience, technological capacity, security of supply and the ability to act independently when necessary.

The EU´s central challenge will be to turn this approach into a sustainable form of strategic openness. This requires reducing genuine vulnerabilities in critical sectors while preserving competition, international partnerships and the benefits of a rules-based trading system. The Commission frames economic-security policy as a proportionate, precise and targeted response to specific risks rather than as a move away from openness.

The unresolved tension is therefore not simply between free trade and protectionism. It is between the need for resilience in an increasingly fragmented geopolitical environment and the need to remain competitive, open and connected to the global economy. Whether the EU can manage this balance will determine whether its economic-security agenda strengthens European autonomy or gradually weakens the openness on which European prosperity has traditionally depended.

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