To prevent embargoes, US and Japan agree on access to battery minerals

Robert Besser
02 Apr 2023, 10:34 GMT+10

The US and Japan have signed a trade memo on electric vehicle (EV) battery minerals
US Trade Representative Katherine Tai signed the limited 10-page sectoral agreement in Washington with Tomita Koji, Japan's ambassador to the US
The agreement is aimed at strengthening both countries' battery supply chains and allow Japanese automakers to access a new $7,500 EV tax credit provided by the US

WASHINGTON D.C.: The US and Japan have signed a trade memo on electric vehicle (EV) battery minerals.

US Trade Representative Katherine Tai signed the limited 10-page sectoral agreement in Washington with Tomita Koji, Japan's ambassador to the US.

The agreement is aimed at strengthening both countries' battery supply chains and allow Japanese automakers to access a new $7,500 EV tax credit provided by the US.

According to senior Biden administration officials, the deal also prohibits the two countries from enacting bilateral export restrictions on minerals required to manufacture EV batteries, which include lithium, nickel, cobalt, graphite and manganese.

By facilitating collaboration to counter "non-market policies and practices" of other countries in the sector, and through conducting investment reviews of foreign investments in their critical minerals supply chains, the agreement will also reduce US-Japanese dependence on China for EV materials.

Through trade deals that focus on minerals, the Biden administration aims to open up access to the $7,500 per vehicle EV tax credits included in the 2022 Inflation Reduction Act.

The administration is now negotiating a similar agreement with the EU.

Speaking to reporters in Tokyo, Japan's trade minister Yasutoshi Nishimura said, "EVs made with battery minerals mined or processed in Japan were expected to meet the requirements to qualify for that part of the US tax credits," as reported by Reuters.

"As the demand for electric vehicle batteries is expected to grow significantly, securing important minerals essential for their production is an urgent issue," he added.

In a statement, Tai said, "Japan is one of our most valued trading partners and this agreement will enable us to deepen our existing bilateral relationship."

The two countries will review the agreement every two years, including whether it should be terminated or amended.

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