The European Union’s trade commissioner, Maros Sefcovic, announced that the EU is working on creating new trade instruments to lessen its reliance on China. Sefcovic emphasized the need for a dedicated instrument for diversification due to the unsustainable trade deficits accumulating with China. He highlighted the disruptions in the supply chain of rare earths and semiconductor components last year, stressing the necessity for a policy shift.
Sefcovic expressed concerns over China’s dominant control in global rare-earth refining and mining, citing the need to reduce dependence on single suppliers. Recent incidents, such as Beijing’s export controls on a Dutch semiconductor company, have underscored the urgency for strategic diversification. Sefcovic urged businesses to factor in the cost of resilience and recognize geopolitical risks as essential business risks.
The European Commission has been urged by countries like France and Spain to enhance its trade defense mechanisms against Chinese overcapacity. Despite initial support, Spain distanced itself from the proposal following threats of retaliation from Beijing. Denis Redonnet, the EU executive’s chief trade enforcement officer, hinted at the forthcoming introduction of a new trade instrument to address China’s significant distortions in the global economy.
