The US and EU have announced their intention to negotiate an agreement on critical minerals for electric car batteries. However, the US government has taken it one step further and submitted a concept paper for a transatlantic raw materials partnership to the EU Commission. Handelsblatt had access to the confidential paper, which proposes a deal for the raw materials cobalt, graphite, lithium, manganese, and nickel. The agreement would cover trade facilitation and the alignment of standards for worker protection.
“This will all happen relatively quickly,” one person involved from the German side told Handelsblatt. The two parties could sign the agreement within weeks.
The Inflation Reduction Act (IRA) stipulates that 40% of a battery’s critical minerals come from the US or a country with which the US has a free trade agreement. Until now, the US has only signed such a free trade agreement entitling it to the US tax credit for electric vehicles with Canada and Mexico. The EU could now join the ranks.
See also: US and EU Negotiate Agreement on Critical Minerals for Electric Vehicle Batteries
US President Joe Biden and EU Commission President Ursula von der Leyen met two weeks ago to discuss how the US and the EU could coordinate their incentive programmes. Several EU states had accused the USA of distorting competition with the IRA. In total, the IRA provides an estimated $370 billion for climate-neutral technologies, which caused European leaders to lobby Washington for the US to open up its funding programme for months.
In response to the IRA, the EU also announced its own subsidy programme earlier this month. Countries will be able to offset subsidies offered by a non-European government in an attempt to keep the company in the EU. The Commission adopted the revised state aid rules titled ‘Temporary framework for crisis management and change’. The amendment applies only until the end of 2025.
See also: EU Aims for Self-Sufficiency in Critical Raw Materials by 2030 with New Law
This proposed partnership could strengthen the transatlantic relationship and enhance economic growth in both the US and the EU. As US Secretary of Commerce Gina Raimondo said, “I believe that the US and EU can be the engines of the global economic recovery.”
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