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Usa Japan, what the agreement on minerals for electric cars provides

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Usa Japan, what the agreement on minerals for electric cars provides

WASHINGTON. Important new strategic agreement between the United States and Japan. After the strengthening of the military partnership, announced in recent months during Fumio Kishida’s visit to the White House by Joe Biden, there is a step considered crucial on the mineral resources front. After the decisive round of negotiations held yesterday in Washington, the two countries pledge not to impose export tariffs on critical minerals in the context of bilateral trade. Not only. The US and Japan have pledged to encourage higher labor and environmental standards for minerals critical to powering electric vehicles, such as lithium, cobalt and nickel. It is also claimed that it wants to promote a more efficient use of resources and want to confer on how to review the investments of foreign entities in the sector.

“The United States and Japan share an interest in strengthening supply chains between like-minded partners and increasing resilience against threats such as economic coercion,” US Commerce said. The agreement also neutralizes Japanese concerns related to the Inflation Reduction Act, which establishes that 40% of the critical minerals contained in electric batteries must be extracted or processed in countries that have free trade agreements with the States. Percentage even destined to double up to 80% in 2027. Now Japan will be able to benefit from some subsidies. A model agreement that according to the New York Times could also be replicated with the European Union.

The perspective of Washington and Tokyo’s decision is to develop more stable supply chains for electric vehicles that do not depend so heavily on China. The White House believes that China’s dominance in the global automotive battery industry, including processing the minerals needed to make the batteries, makes the United States very vulnerable. In fact, Beijing dominates the rare earth market, as well as the extraction of strategic mineral resources for the sector around the world. Starting with cobalt in the Democratic Republic of Congo, lithium in Chile or nickel in Indonesia. A crucial strategic advantage for its producers. Not only for BYD, now the largest electric car manufacturer in the world ahead of Tesla, but also for other players such as Geely, which has the largest production of lithium-ion batteries in the world at its disposal.

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As is already the case on microchips and the military front, the United States and Japan strengthen relations almost always keeping China in mind.

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