EU to force companies to buy components from non-Chinese suppliers, FT reports
EU Plans to Diversify Supply Chains and Reduce Reliance on China
Overview of Proposed Legislation
May 18 (Reuters) - The European Union is drawing up plans to force companies in the bloc to buy critical components from at least three different suppliers in an attempt to reduce reliance on China, the Financial Times reported on Monday.
The new rules would affect businesses in a handful of key sectors like chemicals and industrial machinery, the report added, citing two EU officials familiar with the matter.
Supplier Diversification Requirements
Under the new legislation companies would be limited to buying about 30% to 40% of components from a single supplier and would have to source the rest from at least three different suppliers not coming from the same country, the FT said.
China's Role in Global Supply Chains
This comes as China continues to use its chokehold on the processing of many minerals as leverage, at times curbing exports, suppressing prices and undercutting other countries' ability to diversify their sources of the materials used to make semiconductors, electric vehicles and advanced weapons.
EU Response and Trade Measures
European Union Trade Commissioner Maros Sefcovic is planning a series of punitive tariffs on Chinese chemicals and machinery in a bid to tackle the bloc’s 1 billion euro ($1.16 billion) a day trade deficit and insulate companies from China’s “weaponisation of trade," the newspaper said.
Transatlantic Cooperation
Last month, Sefcovic signed a memorandum of understanding with U.S. Secretary of State Marco Rubio for a partnership on producing and securing critical minerals, as part of a push to loosen China's grip on materials crucial to advanced manufacturing.
Next Steps and Official Statements
According to the FT report, these early-stage plans will be presented to a commission meeting dedicated to China on May 29 and could then be endorsed by EU leaders in late June.
A European Commission spokesperson confirmed to Reuters that it will hold an orientation debate on EU–China relations on May 29 but declined to comment on internal discussions, adding that such debates do not involve the adoption of formal proposals.
Additional Information
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(Reporting by Rhea Rose Abraham and Akanksha Khushi in Bengaluru; additional reporting by Preetika Parashuraman; Editing by Christian Schmollinger and Thomas Derpinghaus)
