The European Union plans prohibition on manufacturing sensitive technology in China, such as supercomputers, AI, and advanced microchips
The European Economic Security Strategy, which was unveiled by Commission President Ursula von der Leyen, intends to control the international trade and investment activities of European businesses.
The recommendations will be debated at the forthcoming EU summit, which will include leaders of state and government on June 29-30.
Producing sensitive technology in China: Geopolitical risk
Margrethe Vestager, head of the EU’s competition bureau, said that although the plan is not country-specific, the EU intends to assess threats through a geopolitical lens.
The goal is to discern between supply reliance on allies and systemic rivals.
The EU’s aim to propose a prohibition on the production of sensitive technology in China, aligns with its strategy with G7 concerns about China.
This is also is aligned with, the EUs positions of a leading economy with a comprehensive economic security policy.
Balancing cooperation and security
Von der Leyen emphasised that most commercial and economic interactions with nations, including China, will stay unaltered despite acknowledging China as a vital partner in tackling global concerns.
According to EU foreign policy leader Josep Borrell, the EU does not favour conflict with China. The plan seeks to preserve the right amount of cooperation while also defending European interests.
Asserting control on creating sensitive technology
The European Economic Security Strategy gives Brussels the authority to evaluate strategic threats and take appropriate action on sensitive technology in China.
Reviewing inbound investment screening, enhancing export controls collaboration, and implementing outbound investment screening are three crucial areas for control improvement.
The contentious provision grants the EU power to regulate outsourcing of critical industries and technologies, preventing relocation to autocratic nations.
Safeguarding intellectual property and national security
The strategy focuses on risks of excessive outsourcing to countries like China, which can compromise intellectual property and national security. To mitigate these risks, the EU can ban harmful outbound investments.
Ultimately, experts suggest that the current division between trade and security instruments is inadequate given technological and industrial rivalries.
Targeting critical technologies
The EU’s strategy specifically identifies areas such as quantum computing, artificial intelligence, and advanced semiconductors as prime focuses for preventing outsourcing.
Nevertheless, concerns remain among certain EU member states and businesses regarding potential impacts on the investment climate and EU authority.
Thorough evaluation and reflection are necessary before proceeding with outbound investment screening.
A step towards defending EU intellectual property
A significant step towards conserving vital technology, defending European intellectual property, and ensuring national security is the European Economic Security Strategy.
The EU aims to achieve a balance between cooperation and security by using a geopolitical filter and assessing supply dependencies.
Despite ongoing concerns, the EU plans to complete the initiative by year-end, with the specific details of the proposal to be determined by the subsequent Commission formed after the European Parliament elections in a year’s time.
