The European Union (EU) is working on plans that will require companies in member countries to purchase strategic components from at least three different suppliers to reduce dependence on China.
In the news published by the Financial Times (FT), based on two EU officials, it was stated that the new rules will affect businesses in several strategic sectors such as chemicals and industrial machinery.
According to the news, within the scope of the new regulation being worked on, the proportion of components that companies can purchase from a single supplier will be limited to 30% to 40%. The remaining part will need to be procured from at least three different suppliers, provided that they are not from the same country.
This step comes at a time when China continues to use its dominance in the processing of many minerals as leverage. China maintains control over materials used in semiconductors, electric vehicles and advanced weapons systems, at times restricting exports, suppressing prices or undermining other countries’ ability to diversify their resources.
The news stated that Maros Sefcovic, the European Commission member responsible for trade, is planning a series of punitive customs duties on chemicals and machinery of Chinese origin. This move aims to close the union’s foreign trade deficit with China, which reaches 1 billion euros ($1.16 billion) per day, and to protect companies from China’s “use of trade as a weapon” strategy.
In order to weaken China’s dominance over raw materials used in advanced manufacturing, the EU and the USA signed a memorandum of understanding last month on the production and supply of rare minerals.
According to the FT, these plans, which are still in their early stages, will be presented at the China commission meeting on May 29 and could then be approved at the EU leaders’ summit at the end of June.
A European Commission spokesman confirmed to Reuters that a meeting on EU-China relations would be held on May 29, but did not comment on internal discussions. The commission spokesman also stated that such meetings do not constitute direct acceptance of official proposals.
