EU to force companies to buy components from non-Chinese suppliers, FT reports

The European Union (EU) 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 May 18.

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.

Under the new legislation, companies would be limited to buying about 30 per cent to 40 per cent 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.

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.

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 (S$1.48 billion) a day trade deficit and insulate companies from China’s “weaponisation of trade”, the newspaper said.

In April, Mr Sefcovic signed a memorandum of understanding with US 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.

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. REUTERS