BRUSSELS, Belgium: The European Commission is considering new legislation that could require companies in sensitive sectors to diversify their supply chains and reduce reliance on individual suppliers, particularly those based in China.

European Trade Commissioner Maros Sefcovic said that the proposal is being examined as part of a broader review of the European Union's trade defense framework, which is expected to be completed by the third quarter.

The review will also examine ways to accelerate anti-dumping and anti-subsidy investigations, as well as potential new measures to address industrial overcapacity.

"Diversification now requires a dedicated instrument," Sefcovic told a conference hosted by the European Policy Center in Brussels. "We understand the urgency for critical minerals, but every high-risk sector must be weaned off single supplier dependence."

Under the proposal being considered, companies could be required to secure critical supplies from at least three different sources rather than relying heavily on a single supplier.

Sefcovic said such an approach would help protect businesses from supply chain disruptions and government actions such as export restrictions imposed by China on certain rare earth materials.

He did not identify which sectors would be classified as high-risk or critical, nor did he specify which suppliers might be affected.

The issue is expected to be discussed by EU leaders at a summit in Brussels on June 18 and 19, with economic security among the topics under consideration.

Sefcovic said the meeting would likely guide the European Commission in prioritizing policy tools.

The proposal comes amid growing concern within Europe about economic dependence on external suppliers for strategic goods and raw materials.

Last month, five EU member states issued a joint paper calling on the bloc to strengthen its trade defense mechanisms to protect itself from low-cost imports better.

Sefcovic noted that existing EU policies already encourage companies to diversify if a single source accounts for 40 percent of certain supplies.

"Should this need to be reinforced and made more concrete? I think this is what we will look at," he said.

Any new requirements would be developed in consultation with businesses and would include a transition period to allow companies time to adjust their operations, he added.

"I know that times are hard and the economic situation is very challenging, but we need to work with them (industry) on how they would integrate this risk premium into their business operations. It was not needed before... this has changed," Sefcovic said.