The United States and the European Union are to seek to reach an agreement on critical raw materials to boost supply chains and potentially ease tensions over electric vehicle tax credits available for American companies.
US president Joe Biden and European Commission president Ursula von der Leyen held talks for over an hour at the White House on Friday.
The meeting came on foot of concerns in the EU over provisions in the Biden administration’s Inflation Reduction Act (IRA), which it fears is protectionist and could harm the European economy.
The legislation provides tax credits for manufacturers that source parts and materials from countries with which the US has a free trade deal – which does not include the EU, sparking concerns some companies could move operations to the United States.
Speaking afterwards, Ms von der Leyen said the goal was “to have an agreement on critical raw materials that have been sourced or processed in the EU; that these strategic supply chains are able to access the American market as if they had been sourced in the United States and also access to all the necessary benefits from the United States”.
She said both sides had also agreed on a “transparency dialogue” on incentives given to the green tech industry.
She also said they had discussed “Russia’s atrocious war in Ukraine” and that there was a “strong focus on the question of sanctions” and on enforcement and preventing circumvention.
In a joint statement Mr Biden and Ms von der Leyen said: “We will deepen our co-operation on diversifying critical mineral and battery supply chains, recognising the substantial opportunities on both sides of the Atlantic to build out these supply chains in a strong, secure, and resilient manner. To that end, we intend to immediately begin negotiations on a targeted critical minerals agreement for the purpose of enabling relevant critical minerals extracted or processed in the European Union to count toward requirements for clean vehicles in the Section 30D clean vehicle tax credit of the Inflation Reduction Act.
“This kind of agreement would further our shared goals of boosting our mineral production and processing and expanding access to sources of critical minerals that are sustainable, trusted, and free of labour abuses. Co-operation is also necessary to reduce unwanted strategic dependencies in these supply chains, and to ensure that they are diversified and developed with trusted partners. "
The statement said both the US and EU sides would take steps to avoid any disruptions in transatlantic trade and investment flows that could arise from their respective incentives to the green tech sector.
“We are working against zero-sum competition so that our incentives maximise clean energy deployment and jobs - and do not lead to windfalls for private interests. The clean energy incentives dialogue will become a part of the EU-US trade and technology council where it will also facilitate information-sharing on non-market policies and practices of third parties - such as those employed by the People’s Republic of China (PRC) - to serve as the basis for joint or parallel action and co-ordinated advocacy on these issues in multilateral or other fora "
Before the start of the meeting, Mr Biden thanked the European Commission president for her leadership on the recent deal with the UK on the Northern Ireland protocol.
He said it “probably surprised a lot of Europeans how strongly so many Americans feel about the [Belfast] agreement.
