The European Union and the US are nearing an agreement on critical minerals that would provide EU companies access to some of the massive green subsidies offered in President Joe Biden’s Inflation Reduction Act (IRA).
The deal will likely be similar to an agreement the US signed with Japan this week that also included a commitment to not impose restrictions or export duties on cobalt, graphite, lithium, manganese and nickel that are used in electric car batteries, according to people familiar with the talks.
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 IRA.
“We are currently discussing with the US the exact content and the potential legal procedures” for this FTA-equivalent deal on raw materials, the EU’s trade chief, Valdis Dombrovskis, said Tuesday at an event hosted by Generali.
The EU has been seeking 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. The EU has said that aspects of the bill would unfairly discriminate against European companies and was seeking an exemption for European firms.
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, said the people who spoke on the condition of anonymity. The US is expected to issue guidance on the legislation this week.
An deal has yet to be finalized but will likely be completed soon, the people said. The Financial Times reported some of the details of the agreement earlier.
Dombrovskis added that the US guidance “can lead to stricter or less strict application” of the massive subsidy plan. That is why the commission has been discussing with the US Treasury an interpretation that is less disruptive for European companies.