It is summer, it is hot, and for many it may be time to buy an inflatable boat or camping equipment. Problem: to get hold of it, Europeans depend on importing it from third countries, as happened, during the pandemic, with the "essential" sanitary gloves, explains the European Commission.
The EU was and is dependent on importing hundreds of materials and products. But beyond, some, up to 204, are created "strategic dependencies", according to the new calculation of the General Directorate of the Internal Market, Industry, Entrepreneurship and SMEs of the Commission itself.
And here, consequently, the cold sweats are concentrated in Brussels as in the rest of the European capitals.
Because without camping you can spend the summer. But without other products, "it is difficult to function", summarizes Román Arjona, the chief economist of the general management, in a conversation with La Vanguardia. Furthermore, while some, such as coal, petroleum coke, or rare earths, are well known, others less so and are critical for transportation, communications, the energy transition, and more.
They represent, both of them, a full stop for the community economy as a whole because they specify to what extent "there is an excessive concentration in foreign products from the EU, and few possibilities of substituting them with domestic production", continues Arjona, in sectors today key for today
43% of the 204 are chemical products and from parallel industries and from Brussels, silicon or rare earths stand out, central to new technologies and renewables. 14% are mechanical devices and electrical equipment, the Commission highlighting the case of laptops and photovoltaic cells. Up to 12% come from basic metals and their derivatives, citing here aluminum and nickel sheets in their different variants. 11% are mineral products such as natural boroates and their concentrates (used for example in creams) or molybdenum and its concentrates, present among other products in alloy steels. Medical and precision instruments also enter the top five, giving Brussels a specific example, above all, scintigraphy devices to scan patients and instruments for aeronautical and space navigation, there is nothing. They represent 6% of the 204 of these materials and products.
Among the remaining 14% of "dependent products" are textiles, plastic and rubber articles or transport materials, precious or semi-precious stones, manufactured articles, as well as plant products. However, the general direction specifies how these, in general, are not considered among the "sensitive ecosystems" except soybeans "due to their relevance for the green transition".
The report thus tries to "put light in shady areas" and wants to avoid reliving, as Arjona himself recalls, what was seen with respirators during the covid, which came from the US, which limited their export and they had to be replaced by others of "more expensive and worse" origins. For the rest, it leaves black on white how to a large extent the EU continues to be dependent not only on importing hundreds of strategic products but, in turn, also on its dependence on very specific and limited markets. Above all, surprise? China. Although also from the US and Russia. And from Switzerland. Or from the UK and India. Of markets that compete with the EU in the new – as is repeated and repeated – world disorder.
That is why the European Commission only details two examples per group to this newspaper. The rest are considered “confidential”. But given its relevance both separately and because of its necessary use for many other derivatives, it is easy to gauge why more details are not given.
And it is that seen by countries of origin, China comes from 64 of the 204 materials and products on which Europe is dependent (31%). From the US, 38 (18%). From Russia, fifteen (7%). From Switzerland, twelve (5%). And from the United Kingdom, ten (over 5%). Then, to a lesser extent, those from India appear, nine (4%); from Japan and South Africa, six (3%); and from Canada, four (over 2%).
What changes, and a lot, when analyzed according to the value of these imports, since 58% are of Chinese origin and include mobile phones and laptops prominently. 9% come from the US and in sectors as varied as agricultural products and high-tech appliances. From Russia 3%, here standing out the semi-finished products of steel and other metals or coal, as also happens with the US, it is specified. Only 1% would come from Mexico according to the value of what was imported, but among this 1% are orthopedic devices and fluorite. Only 2% of the United Kingdom is, although submersible drilling platforms stand out. 2% also comes from Japan and its maritime propulsion engines or materials from the motor sector stand out. And apart from that, Vietnam stands out, with 7% in mechanical and electrical products beyond the less critical textiles.
The detailed list of the 204, however, it is insisted, is not given because it "influences" beyond taking each product or material separately, says Arjona. And even more so when, if they are combined with possible bottlenecks with respect to some origins, she points out that "really if something happens with that country we are going to have big problems."
What happens, especially, again, with China.
Because 64 of the 204 products that Europe depends on importing from the Asian Giant, 45, 70%, are critical in this sense. That is to say: without importing them from China today, little could be done to obtain them. 13% are from the US; from Russia, 7%; from Switzerland, one in 12, from the United Kingdom, one in 10; and from India, two out of nine. This is how "shock points" appear for hormones and for vitamins or for laptops and more explain why India is relevant, for example, although it is limited to very specific sectors such as being the main manufacturer of the active ingredients of drugs from the globe together with China.
Worse? Worse: Brussels transfers that the proportion of dependent products with the highest risk of strangulation (that is, in decile 10 following its method) is for China in approximately 60% of cases, substantially more than in the US. , Japan, or other partner countries relative to the same decile.
Solutions? “To better understand what is happening”, begins Arjona. And “trying to work with international partners to diversify the offer, whether they are Canada, in Africa, etc.”, she continues. Also "mobilize the existing instruments and that are summarized in regulation, financial resources, human resources (since more than 150,000 professionals are estimated to be necessary for hydrogen alone) and ensure access to fundamental raw materials", she is quoted. The European strategy, however, "is not to disconnect with China, but to graduate the level of risk. There's no point in disconnecting. The Chinese is a great market and it is evolving, ”she insists.
In advanced manufacturing, the EU "sees a good performance with more than 30% of patents," says Arjona. An "intermediate" position, he emphasizes, is held in the now central sector of batteries "although it needs support especially from the public." In chips, semiconductors, cloud or solar technologies, on the other hand, there are, as usual, deficiencies, as they depend on others such as China and Taiwan "because of how the value chain has been organized," it is explained. Other complementary analyses, such as that of the European Central Bank, also highlight dependencies for the financial sector "with an international payment system that is not based on the EU but on the US. Or on crypto assets," it was stated. continue.
The dilemma, however, is that today a European can end up without a laptop or photovoltaic cells or basic medical and pharmaceutical resources in the short term if "globalization comes to an end", as explained by Branko Milanovic to La Vanguardia this same year.
“The world has changed and it must be faced. The EU must act in cases of high dependence on the importation of products considered critical in the global market and that depend on a market concentrated on their production", it is concluded from Brussels.
The countdown seems to have started.
