The United States of America and Japan have signed a trade deal which is on electric vehicle battery minerals that is important for boosting their battery supply chains and further granting Japanese automakers broader access to a new $7500 US EV tax cut.
The “Agreement Between the Governments of Japan and the Government of the United States of America on Strengthening Critical Minerals Supply Chains” was signed by Katherine Tai, United States Trade Representative, and Tomita Koji, Ambassador of Japan to the United States.
The agreement expands on the 2019 U.S.-Japan Trade Agreement and will help to boost the use of electric vehicle battery technologies while strengthening and diversifying supply chains for vital minerals. The agreement specifically upholds the shared commitment of the US and Japan to advance strict labor and environmental standards, fair competition, market-oriented conditions for trade in critical minerals, and collaboration in efforts to ensure sustainable, transparent, equitable, and secure critical mineral supply chains. This is according to the US Trade Representative office.
Lithium, nickel, cobalt, graphite, and manganese are the minerals that are most essential for EV batteries, hence, the agreement forbids either country from adopting bilateral export restrictions on these materials. A similar agreement with the EU is currently being negotiated by the Biden administration.
According to Katherine Tai, the announcement demonstrates President Biden’s dedication to establishing reliable and secure supply networks. A senior U.S. administration official stated that strengthening the supply chain for key minerals advances economic security and stability by assuring the United States and its allies and partners are not dependent on other countries for critical minerals.
The USTR claims that the agreement between the United States and Japan also includes a promise to exchange best practices addressing the scrutiny of foreign firms’ investments made in the vital minerals sector on their respective soils.
The agreement sets a number of new commitments and areas for joint collaboration between the United States and Japan involving supply chains for essential minerals used in electric vehicle batteries, including those connected to:
- Domestic steps to address international non-market policies and practices affecting trade in essential minerals
- No export taxes are imposed on essential minerals.
- The best practices for reviewing foreign organizations’ investments made on their soil in the domain of vital minerals
- Participation, exchange of knowledge, and enforcement of worker rights in the extraction and processing of essential minerals
- Reduce the need for the environmental impact of virgin material extraction and related operations by promoting more resource-efficient and circular economy techniques.
- Encouraging the neutrality of employers in union operations and organizing, and
- Addressing labor rights abuses at organizations involved in crucial mineral supply chains.