European Union is preparing to launch a series of trade countermeasures to safeguard its industrial and economic security against China’s export control on key raw materials such as rare earth elements. This comes after failed diplomatic negotiations with Beijing regarding the issue.
According to sources familiar with the matter who spoke to Bloomberg, the European Commission is preparing a list of trade measures expected to be finalized by the end of this month. These measures are intended to be used as leverage against China to strengthen the EU’s negotiation position. The Commission is also working on a plan to protect the supply of key resources in the short term and ensure alternative sources.
China currently dominates the global rare earth supply chain, with data from the US Geological Survey showing that nearly 70% of the world’s production in 2024 came from China.
Earlier this month, China announced plans to significantly tighten export controls on rare earths and other key raw materials. These materials are vital for various industries including electric vehicle batteries and defense manufacturing, posing a significant threat to European industry and security.
Maros Sefcovic, the EU Commissioner for Trade, held talks with Chinese counterpart Wang Wentao but failed to reach an agreement on addressing the EU’s concerns.
Following a teleconference on Tuesday, Sefcovic told reporters, “We have no intention to escalate the situation, but this has cast a shadow over our relations, so resolving it quickly is crucial.” He stated that both sides will intensify communication, with a Chinese team expected to visit Brussels in the coming days to discuss the issue.
Sources suggest that this issue may be raised at the EU leaders’ summit scheduled for this week in Brussels, although the Commission hopes to avoid specific measures being discussed.
China’s Ministry of Commerce issued a series of new regulations on October 9, expanding export control measures beyond rare earth metals and products to include related technologies, services, and equipment in mining, smelting, separation, and magnet manufacturing.
Of particular concern to Western countries is the provision that exports may require Beijing’s permission if products manufactured abroad contain or use more than 0.1% of Chinese rare earth materials or related technologies. A draft conclusion seen by Bloomberg from the EU leaders’ summit stated, “To counter unfair trade practices, the European Council invites the Commission to fully exploit the EU’s economic security tools.”
Bloomberg analysis reports that the EU may leverage its robust Anti-Coercion Instrument (ACI) to swiftly take action against countries engaging in trade coercion, including imposing tariffs or procurement restrictions.
In terms of coordinating with allies, the EU is discussing coordination efforts with the Group of Seven (G7) countries to diversify supply chains and reduce reliance on China. On October 20, the United States and Australia signed a critical minerals agreement to counter China’s industry dominance.
A report by the European Council on Foreign Relations (ECFR) suggests potential countermeasures the EU could use, including aviation parts, old-style deep ultraviolet lithography machines, and high-precision bearings among other specialized steel products, where China’s industry is at a disadvantage.