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International relations

EU unveils plan to cut reliance on China, other foreign suppliers

Dependence on just a few sources has shown bloc's vulnerability during pandemic

The European Union unveiled on Wednesday a plan to cut its dependency on Chinese and other foreign suppliers in six strategic areas.   © Reuters

BRUSSELS (Reuters) -- The European Union unveiled on Wednesday a plan to cut its dependency on Chinese and other foreign suppliers in six strategic areas like raw materials, pharmaceutical ingredients and semiconductors after the pandemic-induced economic slump.

The 27-nation bloc outlined the urgency of the task citing Europe's reliance on China for about half of 137 products used in sensitive ecosystems, mainly raw materials and pharmaceuticals and other products key to the bloc's green and digital goals.

The updated industrial strategy plan was devised after the COVID-19 pandemic showed bottlenecks in supply chain and the executive European Commission plans to conduct in-depth reviews of supply chains in raw materials, batteries, active pharmaceutical ingredients, hydrogen, semiconductors and cloud and edge technologies, to decide how to deal with them.

"Today's updated Industrial Strategy is about making sure our industries are equipped to drive the digital and green transformations of our economy while ensuring the competitiveness of our industries, also in the context of the recovery from the coronavirus crisis," European Commission Vice-President Margrethe Vestager told a news conference.

The EU measures could include "diversifying supply and demand relying on different trading partners whenever possible, but also stockpiling and acting autonomously whenever necessary", the 19-page document said.

To reduce import dependency, EU countries could pool resources for Important Projects of Common European Interest (IPCEIs) in next-generation cloud, hydrogen, low-carbon industry, pharmaceuticals and a second IPCEI on cutting-edge semi-conductors.

An IPCEI would allow EU governments to pump in funding under easier state aid rules and for companies to work together on the entire range of the project, from design to production and downstream applications.

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