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Critical minerals: EU hopes to find a quick agreement with the US

The EU is seeking a deal with the U.S. on critical materials for the energy transition, following a similar deal with Japan, while concerns about Biden's IRA subsidies continue to grow among the U.S.'s economically close partner countries.

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The European Union(EU) hopes to find “as quickly as possible” an agreement with the United States on critical materials, necessary for the energy transition, said Thursday in Washington Valdis Dombrovskis, the European Commissioner for Trade, ensuring that both sides of the Atlantic were working in this direction.

Following a meeting with the U.S. Ambassador for Trade, Katherine Tai, Mr. Dombrovskis recalled the need to reach a rapid agreement to “settle the discriminatory elements” present, according to the EU, in the major climate plan (IRA ) of President Biden, voted last summer.

“The United States has already signed an agreement of this type with Japan, which proves that it is possible to find common ground,” insisted the European Commissioner. Japan and the United States signed an agreement at the end of March on “supply chains for critical materials and batteries for electric vehicles” which allowed Japanese vehicles to be included in the list of those eligible for the $7,500 subsidy for the purchase of a new electric vehicle, one of the IRA’s flagship measures.

These award conditions, to be confirmed in late April, allow access to these grants to countries bound by a free trade agreement with the United States, “a term that includes recently negotiated agreements on critical materials,” the Treasury Department said at the time. This is precisely why the EU hopes to reach such an agreement soon.

The European bloc has repeatedly expressed its concerns about the IRA subsidies in this sector, as well as in the wind and solar panel sector, fearing that they will lead companies to choose investments in the United States rather than in Europe. Canada, which is linked to the United States by the AEUMC free trade agreement, which also includes Mexico, expressed on Wednesday, through its Finance Minister Chrystia Freeland, a certain “anxiety” about the IRA and what the plan implies for countries economically close to the United States.

Speaking at the IMF’s spring meetings in Washington, D.C., Freeland acknowledged the value of the IRA in accelerating the transition of the U.S. economy but expressed concern about the risk of a “subsidy race.” “The risk is that it will drag us down” by pushing different countries to give more and more tax breaks. When asked about this on Thursday, Ms. Tai said that the IRA would strengthen trading partners such as Canada, which are “essential in our efforts.

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