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As Trade War with China Looms, How Can the EU Defend Itself?
The proposed rules would cap purchases from one supplier at 30% to 40% and force firms to spread sourcing across at least three suppliers.
The European Union is drafting plans to force companies to limit purchases from a single supplier to about 30% to 40% of components, requiring the rest from at least three different suppliers to reduce reliance on China.
European Union Trade Commissioner Maros Sefcovic plans punitive tariffs on Chinese chemicals and machinery to tackle the bloc's 1 billion euro daily trade deficit and insulate companies from China's 'weaponisation of trade.'
Under the proposed legislation, companies must source critical components from suppliers in different countries, affecting materials like cobalt from Congo and Indonesia beyond China alone.
European Commission trade spokesperson Olof Gill confirmed plans face a commission meeting on May 29 but declined to comment on internal discussions, adding such debates 'do not involve the adoption of formal proposals.'
To build alternative supply chains, the European Union plans to leverage free trade agreements with more than 70 countries, as officials argue traditional World Trade Organization instruments require exhaustive investigations taking up to two years.
The EU wants to strengthen its economic independence from China. Companies should purchase certain components from several suppliers, according to a report.