Trade Commissioner Maroš Šefčovič told Euronews in an exclusive interview that all critical strategic supplies can be used as a weapon against the European Union.
The EU is dealing with the fallout of the Dutch government’s takeover of Nexperia, a company specializing in chips, citing national security. The move from the Hague has prompted a clash between Europe and China over who controls the company and its finished products, resulting in Chinese restrictions of chips exports.
Šefčovič, an experienced politician who handles the all-important trade portfolio for the EU, said the episode highlights the complexities of the global supply chain as well as the risks connected to critical dependencies to third countries outside of the UE.
“It very much underlines the lessons we’ve learned over the past years, and it doesn’t concern only China. Today everything can be weaponized,” Šefčovič told Euronews. For Europe, he argued, “it started with [Russian] gas, then it continued with critical raw materials and high and low-end chips. It can all be weaponized.”
Šefčovič has been in contact with Chinese and Dutch authorities since the spat started more than a month ago. The Dutch government took control of Nexperia on September 30, fearing that the company was going to be dismantled and relocated to China. The Dutch worried that the move could also involve a transfer of sensitive technology.
The Chinese responded by blocking chip exports out of China, triggering concerns in Europe and across the world about a potential global shortage of chips for cars.
The impasse eased on October 30th following a meeting between the Chinese and the United States in South Korea where both sides agreed to a truce in their bilateral trade dispute.
“China is taking appropriate measures to ensure trade from Nexperia’s facilities in China resumes, so that production of crucial chips can flow to the rest of the world”, a White House statement read.
Šefčovič suggested that the partial restoration of exports points to the start of a resolution to the standoff but reiterated the debacle was a warning of the urgent need to diversify.
“We are getting information from the car manufacturers to the spare parts producers that they are getting these chips” he told Euronews. “But we are only at the beginning of resolving this problem, so we will continue to talk with our Dutch colleagues and Chinese authorities.”
Vincent Karremans, the Dutch minister at the centre of the storm with the Chinese, said in an interview that he would do it all again in the same manner and signaled that the episode is a warning of the large dependencies Europe has built over the years.
EU preparing new doctrine on economic security
The Nexperia saga is the latest incident between China and the EU over the supply of strategic components used across industries from cars to defense.
It also highlights how these materials are becoming a political tool to exert pressure through economic coercion. After weeks of tensions, impacting the European industry, the EU has secured a deal with China to ease the restrictions of some rare earth exports.
The Commission is working on a plan due to be presented next month addressing some of these weaknesses. Šefčovič said the global competition to secure rare earths, critical components and secure a stable supply chain required a unified approach.
“We have to work a little bit more like Japan where they’re stockpiling some of the critical raw materials, some of that critical technologies and critical chips”, said Šefčovič.
“I think this would be one of the lessons which we want to bring in the new economic security doctrine which we’ll be presenting before the end of the year”, he said.
The EU has been actively pursuing a policy of de-risking, but not de-coupling from China, which would keep the door open to trade but apply safeguards in key areas deemed as strategic for the EU and close loopholes into the single market.
“Economic security and effective export controls would work only if they’re applied in a harmony as homogeneous across the EU,” Šefčovič said, adding: “Those who want to abuse the system will always find a weak spot to penetrate the European market – and then put the whole European economy in jeopardy.”
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