EU Seeks EV Rules Clarity Before Signing Key US Mineral Deal

Alberto Nardelli
·3 min read
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(Bloomberg) -- The European Union is seeking to clarify several issues with the US before signing an agreement on critical minerals designed to give EU companies access to some of the massive green subsidies offered in President Joe Biden’s Inflation Reduction Act.

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Among the small number of issues the EU wants cleared is the extent of critical minerals covered by the accords and how the pact would meet the requirements of the IRA’s rules on electric-vehicle tax credits, according to people familiar with the matter.

A draft of the agreement, seen by Bloomberg, currently lists five minerals — cobalt, graphite, lithium, manganese and nickel — echoing a deal the Biden administration signed with Japan earlier this week.

One of the main purposes of the accord would be to allow EU-extracted and processed critical minerals to count toward the requirements to qualify for IRA benefits.

Biden and European Commission President Ursula von der Leyen announced earlier this month in Washington that they were trying to reach a deal on critical minerals. Bloomberg previously reported that the minerals accord would be seen as equivalent to a free-trade agreement, giving EU companies some of the benefits of the act.

The EU has sought concessions from the law, which will offer as much as $369 billion in handouts and tax credits over the next decade for clean-energy programs in North America. Brussels has said that aspects of the bill would unfairly discriminate against European companies and was seeking an exemption for European firms.

The US is expected to issue guidance on the legislation this week. The minerals agreement and an earlier US concession covering leased electric vehicles made in the EU are unlikely to address all of Europe’s concerns.

Other issues the EU needs to assess both internally and with the US are the scope of some of the trade, environmental and labor-related provisions of the agreement, and both their links with the IRA and implications on EU policy, said the people, who spoke on condition of anonymity to discuss private discussions. The two sides also need to finalize procedural steps.

The draft text includes a commitment to confer on potential measures to address non-market policies and practices of non-parties to the accords affecting trade in critical minerals. It does the same on issues relating to global critical minerals supply chains.

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The EU and US would look to build a shared understanding of certain non-parties’ industrial directives and non-market policies and practices in critical minerals to possibly develop coordinated action to reduce vulnerabilities dependencies, according to the draft.

The two sides would also look to share best practices regarding investments in the sector by foreign entities to determine the impact of these on national security, the draft said.

One of the people said discussions were ongoing but they hoped to finalize an agreement soon.

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