According to sources quoted by the British ‘Financial Times’ on July 15, the European Commission is forming a cross-sector crisis response team to address a range of potential risks, including Sino-European trade conflicts. The team is expected to hold its first meeting in September, and the EU is concerned that as China’s temporary restrictions on rare earth exports expire in October, both parties may be faced with another trade dispute.
Reports quoted three officials as saying that the team members will come from various departments of the European Commission, including those responsible for industry, trade, financial services, economics, and development aid. Additionally, there will be a core team directly led by the President of the European Commission, Ursula von der Leyen. EU officials stated that the purpose of establishing this mechanism is to ‘increase operational flexibility’ and to detect and respond to potential problems in advance.
Rare earth supplies are one of the areas of focus for the European Union at present. EU officials say that the EU is preparing for possible trade conflicts in October, when China may reintroduce restrictions on the export of key rare earth products.
Currently, China holds an important position in the global rare earth industry chain, accounting for approximately 66% of the world's rare earth mineral supply and about 88% of the refined supply. Reports indicate that after the Sino-US summit meeting in October last year, China agreed to suspend some export restrictions on rare earth magnets and raw materials for one year. However, a licensing system was also implemented for exports, requiring European customers to submit applications and provide information such as production methods and end-users.
The EU is concerned that if the relevant arrangements fail, industries such as automobile manufacturing may be affected.
Regarding the issue of rare earth export controls, China has previously stated that imposing necessary controls on dual-use items is a common practice for countries to exercise their sovereignty and fulfill their international obligations. Such policies are in line with international practices and also contribute to maintaining world peace and stability. China also emphasizes that rare earth exports have never, and should not become, an issue between China and Europe. As long as export control regulations are followed and necessary procedures are carried out, the normal trade needs of European enterprises will be guaranteed.
The report also stated that the disputes surrounding AMS Semiconductor this year have made Europe feel the risks of supply chain dependence. The European Union is also expanding its efforts to ensure supply chain security. The European Commission expects to propose a plan in September to address issues related to supply chain dependence, which may include restrictions on the export of aluminum waste, promoting the recycling of rare earth magnets, and introducing new regulations to diversify supply chains, aiming to reduce companies’ reliance on a single supplier.
However, EU officials also expressed the hope that the relevant arrangements between China and the EU will continue until October, and they do not wish for further escalation of trade friction.
