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European Chips Act expected to involve export and investment controls

The European Commission is preparing a new piece of legislation that aims to boost production of next-generation semiconductors in Europe, a European Chips Act: its trade and investment policy dimension will be a spot to watch.

The Chips Act move, announced by the EU executive body’s president Ursula von de Leyen last September, aims to mirror an equivalent United States Chips Act which is currently in the legislative pipeline in Washington.

Brussels also aims to advance in parallel with the US regulatory process, compare notes and cooperate where possible as part of the new transatlantic Trade and Technology Council.

The next TTC is tentatively scheduled for the spring 2022 and expected to be hosted in France.  It is also expected to address semiconductors more systematically, as the matter was one of the topics that were largely left to the side at the inaugural gathering in Pittsburgh, United States.

The Commission wants the European Union to be the place where 20% of global chips production happens by 2030. And the EU’s Chips Act aims to give the continent the means to do so.

It would leverage existing Brussels-led industrial policy initiatives such as an already-created semiconductor alliance.

The act would involve boosting research and development capacity, making EU competition rules more flexible notably for cross-border projects, organising public funding of production sites in cooperation with member states and developing a supply chain resilience system that ranges from raw materials sourcing to the final assembly stage.

The new act as it is currently being considered by the Commission would also include export controls as well as controls of incoming foreign direct investments.

Speaking of what he considers currently “activist” Chinese investments in the semiconductor sector, the commissioner in charge of the initiative Thierry Breton hinted that such controls would be considered in the new piece of legislation. “We want to make sure we preserve out resilience,” said Breton.

“We will always respect the World Trade Organization, because this is extremely important to us,” said Breton at a conference hosted by the Brussels-based think tank Centre on Regulation in Europe. Breton then went on to say: “We need to adapt the instrument” to new geostrategic realities, and that, to Breton involves “trade policy and competition policy”.

Breton said he hoped to table the new legislative act for consideration by the Council and European Parliament in early 2022.

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