The European Commission is weighing legislation that would require companies in sensitive sectors to reduce reliance on single suppliers, particularly in China, and diversify to at least three sources, reported Reuters.

Trade Commissioner Maros Sefcovic stated that the proposal would form part of a wider review of EU trade defenses due in the third quarter. Measures under consideration include expediting anti-dumping and anti-subsidy cases and addressing industrial overcapacity.

Speaking at a European Policy Centre event in Brussels, Sefcovic emphasized that diversification now requires a dedicated instrument. He stressed that critical minerals and other high-risk sectors must be weaned off dependence on a single supplier.

By securing at least three sources of critical supplies, companies would be better protected against supply chain disruptions and government policies, such as China's export restrictions on rare earths, he noted.

EU leaders are expected to discuss economic security at a summit in Brussels on June 18-19 and provide guidance on which tools the Commission should prioritize.

Last month, five EU countries urged Brussels to strengthen trade measures against cheap imports. Current EU policy already encourages diversification when one source accounts for 40 percent of certain supplies.

Mr. Sefcovic mentioned that any new rules would need coordination with industry and a transition period. He acknowledged that the economic situation was challenging but stated that companies must integrate a risk premium into operations as supply chain realities have changed.