President Biden and the president of the European Commission, Ursula von der Leyen, met on Friday to discuss trade and security issues. One of the key topics of discussion was the critical minerals used in electric vehicles, as the United States’ signature clean energy legislation has restrictions on tax credits for electric vehicles built outside of North America and has strict requirements around the source of critical minerals. The legislation has caused tensions with European allies, as it could be seen as trade protectionism. To address the issue, the two leaders discussed a limited trade deal that would help European companies qualify for more tax credits offered in the United States, while also creating a club of countries that could mine, process and trade critical minerals to reduce reliance on China.
The United States and the European Commission will also coordinate more closely in distributing generous new subsidies to the clean energy industry. They plan to avoid bidding wars between the United States and Europe over where to build new plants. Biden and von der Leyen also committed to limiting the impact of the energy crisis in Europe as the European Union reduces its reliance on Russian oil and gas, and to aggressively enforce sanctions that have been imposed on Moscow.
The critical minerals agreement would further boost mineral production and processing and expand access to sources of critical minerals that are sustainable, trusted, and free of labor abuses. The deal over critical minerals could also take months to be finalized, as European officials would need to seek a mandate from their member states to negotiate a trade deal on their behalf and submit the deal to the states for approval.
The agreement would help put to rest one of the most contentious issues in an otherwise close partnership between the United States and Europe. Lawmakers in Congress have raised concerns about the administration ignoring the intent of the law and bypassing their authority to approve trade deals. Treasury Secretary Janet L. Yellen said any agreements would be made in consultation with Congress, but broadening the eligibility for the tax credits was in the spirit of securing America’s supply chains and reducing reliance on China.