EU business opposes plan to diversify supplies away from China — South China Morning Post
In Brussels, Belgium, European industry associations and large companies criticized the European Commission's plans to diversify supply chains, aimed at reducing the EU's dependence on China. Businesses warn that mandatory requirements could increase costs and force companies to seek suppliers that do not yet exist on the market.
As South China Morning Post reports, the European Commission plans to present three new geoeconomic policy instruments in December. None of them will explicitly name China, but the overall goal is to reduce dependence on Beijing and strengthen the EU's ability to respond to trade pressure. According to the publication, the package may be presented on December 9.
Three proposed mechanisms
One of the mechanisms, DiversifyEU, could oblige companies in key sectors to expand their pool of suppliers. To achieve this, Brussels is considering, among other measures, tariffs or incentives in the form of access to public contracts and subsidies.
The second instrument provides for a solidarity mechanism with compensation for companies that may face retaliatory measures during trade disputes. The third is intended to be a rapid-response mechanism that would make it possible to close the EU market to countries engaging in active distortion of competition or economic coercion.
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European Commission President Ursula von der Leyen said that DiversifyEU would be neutral toward specific countries and is intended to help European companies diversify supply chains. According to her, the mechanism's principle is to prevent critical dependence on a single supplier.
Industry concerns
The European Automobile Manufacturers' Association, ACEA, noted that the alternative supply base for rare earth metals, magnets, battery materials, displays, and some semiconductors is very limited or absent altogether. The association stressed that Europe will not be able to match China's costs and does not need complete independence from it.
The Federation of German Industries supported the goal of strengthening resilience but opposed new reporting requirements and mandatory provisions. The organization also called tariffs an unsuitable tool for diversification.
Companies Nokia, Traton, Ikea, and telecommunications tower operator Vantage Towers warned that trade restrictions or a sharp change in procurement requirements without available alternatives could raise costs, delay the rollout of critical infrastructure, and undermine supply reliability. At the same time, at the European Council summit this month, the 27 member states voiced no objections to the plans presented by von der Leyen.
