EU Chips Plans Could Lead to New Export Controls
The European Commission announced plans this week to increase investments and incentives for its semiconductor industry and establish a more reliable chip supply chain to reduce dependence on foreign suppliers. The plans also could lead to more export control measures over sensitive chip products in response to domestic shortages or unfair foreign trade policies.
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The European Union proposal, released Feb. 8, comes as Congress tries to finalize funding for its own set of chip provisions to boost U.S. semiconductor production (see 2202030062). Commission President Ursula von der Leyen said the plan could translate into $49 billion in public and private investments for the European semiconductor industry, including about $17 billion in added investment by 2030. “Europe will always work to keep global markets open and to keep them connected. This is in the world's interest. It is in our own interest, too,” she said. “But what we need to tackle are the bottlenecks that slow down our growth.”
The European Chips Act will largely seek to strengthen EU chip manufacturing and the bloc’s technological leadership, but it also proposes new trade and export control mechanisms that could start immediately. One provision would create a European Semiconductors Board, which will oversee a “crisis response toolbox” to respond to global semiconductor market disruptions. The board, composed of representatives from member states and the commission, could direct the commission to introduce new export controls or “advise on the necessity of introducing an export control regime.”
The EU said these measures will help it build a more resilient chip supply chain, especially for its industrial equipment and automotive sectors. It also said the chips proposal is necessary to combat the global chip shortage as other countries hoard semiconductors. Global chip supplies have dwindled partly due to “trade tensions between the U.S. and China,” the commission said. “The fear of additional export bans by the U.S. has led some Chinese companies to stockpile chips.”
“The current crisis has revealed structural vulnerabilities of the European value chains,” the commission said, adding that the shortage has also shown the EU's “vulnerability to third country export restrictions and other disruptions.”
The commission stressed any emergency trade measures, such as export controls, would be used only to address “significant disturbances” and would preferably be coordinated with close trading partners, such as the U.S. It also said the controls should “only be enacted for the purpose of securing supply to critical sectors,” and they can be tailored to “certain of these sectors or to certain parts of them when the semiconductor crisis has disturbed or is threatening to disturb their operation.”
A European Semiconductor Expert Group will “serve as a platform for coordination” between member states and the commission to discuss potential controls. The commission said it hopes this encourages more collaboration between states to “monitor the semiconductor supply chain and anticipate potential disturbances."
But the commission also emphasized the EU’s need to manage its “interdependencies with the rest of the world” and build “balanced semiconductor partnerships with like-minded countries.” This includes better “coordination on export controls” with allies, including the U.S., Japan, South Korea, Singapore and Taiwan.
“We are already discussing chips with the U.S. partners within the framework of the Trade & Technology Council,” said Margrethe Vestager, the commission’s vice president. “And [we will] also do so with other like-minded partners such as Japan, South Korea and Singapore.”