EU might force firms to have at least 3 suppliers
What's the story
The European Commission is considering new legislation aimed at reducing dependence on single suppliers, especially from China. The proposed law would require companies in sensitive sectors to diversify their sources to at least three. This was announced by European Trade Commissioner Maros Sefcovic during a conference held by the European Policy Centre think tank in Brussels.
Risk mitigation
Diversification now requires a dedicated instrument: Sefcovic
Sefcovic emphasized that diversification is now a necessity, saying, "Diversification now requires a dedicated instrument." He stressed that every high-risk sector must be weaned off single supplier dependence. The trade commissioner further explained that having at least three different sources of critical supplies would protect companies from general supply chain disruptions and government policies, like China's export restrictions on certain rare earths.
Summit agenda
EU leaders to discuss economic security at upcoming summit
EU leaders are scheduled to meet in Brussels for a summit on June 18-19, where they will discuss economic security. They are likely to provide guidance on the tools the Commission should focus on. This comes after five EU countries last month called for an overhaul of trade measures to better protect against cheap imports.
Policy reinforcement
Potential reinforcement of existing EU policies
Sefcovic also noted that there are already EU policies encouraging companies to diversify if they rely on one source for 40% of certain supplies. He hinted at the possibility of reinforcing and making this requirement more concrete in light of the current circumstances. The trade commissioner stressed that any new measures would have to be coordinated with industry and include a transition period.