China: PRC export controls on gallium and germanium. How will the EU react?

China has imposed export controls on gallium and germanium. How will the EU react? Read the Answer by the EU.

The People’s Republic of China (PRC) has placed export restrictions on two critical raw materials — germanium and gallium, with these restrictions also applying to the EU. China produces 60 % of the world’s germanium and 80 % of the world’s gallium. Germanium is used in fibre optic products, while gallium is used in the production of semiconductors.

1. Has the Commission conducted a stress test to identify the impact of these export controls on production capacities in the EU?

2. What steps does the Commission intend to adopt to mitigate the impact of these measures on supply chains?

3. Does the Commission consider these measures by the PRC to be acts of economic coercion (as defined in the Anti-Coercion Instrument) and, if so, what measures is it going to take to address them?

Answer given by Executive Vice-President Dombrovskis on behalf of the European Commission (20.9.2023)

The Commission is closely monitoring the situation and assessing its possible impact on affected businesses and stakeholders, through the EU Delegation in Beijing, as well as through close contacts with industry, EU Member States, and other affected partners.

In this context it is useful to recall that in March 2023, the Commission proposed the Critical Raw Materials Act (CRMA)1 to lessen the EU’s dependencies and the associated risks.

Stress testing supply chains, as well as collecting information and coordinating efforts on stockpiling are part of the proposal. The CRMA could also facilitate strategic projects to produce, refine or recycle gallium and germanium.

EU’s recent free trade agreements, which include chapters on raw materials, as well as strategic partnerships with third countries, can also contribute to the diversification of supply.

In the short term, the Commission is working with international partners as well as EU refiners and recyclers to assess whether, if necessary, they could increase or take up production, as gallium and germanium are both by-products of more common metals.

This is an issue that the EU has raised with China, both at the World Trade Organization’ (WTO) Committee on Trade in Goods, and bilaterally at the level of the EU Ambassador, as well as through Commission services and EEAS in Brussels.

The Commission calls on China to take an approach whereby export controls are based on relevant security considerations, in compliance with WTO rules.

Concerns over the excessively broad scope of the measure have been raised with China in multiple fora.

The Commission notes that the Anti-Coercion Instrument is still with the EU co-legislators for finalisation and adoption, following the final political agreement reached on 6 June 2023.