EU cites weak links in supply chain Half of 137 products from China

Foreign media reported that a draft EU document shows that the EU was caught off guard by sudden changes in the supply chain during the early stages of last year’s epidemic and therefore needs to assess “strategic dependence”, which sets out the EU’s future industrial roadmap.

The document, obtained by the media, shows that the EU is “highly dependent” on some 137 products, accounting for 6 percent of total imports, mainly raw materials and chemicals used in energy-intensive industries, but also pharmaceutical active ingredients and other health protection products.

The analysis particularly highlights the tense relationship between the EU and China, which wants to keep global trade flowing and protect European companies from “unfair practices and foreign subsidies”. The draft is still subject to revision and is scheduled to be finalized next week.

The paper notes that “about half of these (EU) dependent products are imported from China,” stressing that 34 unnamed products may be “more vulnerable” because of the lower likelihood of EU substitution. The paper said about 20 are raw materials and chemicals for the energy industry, with the rest mostly raw materials for the production of pharmaceuticals and other health care-related products.

The EU is tightening its stance on China, with France and Germany pushing for new rules to help create EU leaders so they can compete with leading companies in the global market. The European Commission next week will introduce new rules, including fines and vetoes, to prevent foreign government-owned companies from acquiring European companies.

The document says the EU could consider building “stronger and more diverse alternative supply chains with its closest allies and partners,” saying that “building inventories and acting autonomously when necessary” should also be part of the one of the initiatives.

The remainder of the paper looks at how to prepare the single market for future crises and facilitate the green and digital transition, notably through the EU’s New Epidemic Recovery Fund.