The U.S. and Japan have signed a new trade deal around critical minerals for batteries meant to shore up supply chains for electric vehicles.
The deal is designed to promote fair competition, robust labor and environmental standards, and cooperative efforts between the U.S. and Japan to procure secure and sustainable mineral supplies, according to a Tuesday press release from the U.S. Trade Representative’s office.
The agreement, signed by U.S. Trade Representative Katherine Tai and Japan ambassador Tomita Koji, became effective immediately on signing.
The commitments between the two countries include:
- An agreement not to impose duties on critical minerals.
- Best practices for reviewing investments from foreign entities within their territories.
- Measures promoting circular approaches to mineral supply to reduce the demand for virgin material extraction.
- Information-sharing and enforcement actions on labor rights in mineral extraction and processing.
- Pushing for employer neutrality in union organizing.
Tai described Japan as one of the country’s “most valued trading partners” and said the deal on minerals would deepen their bilateral relationship.
It also continues the focus of the Biden Administration on EVs and batteries, both of which received support from the Inflation Reduction Act that Democrats passed and Biden signed last year.
The bill is expected to raise demand for EVs through tax credits for consumers who buy vehicles that are assembled in North America. The credits also come with rules, still being finalized, requiring at least half of battery components to be sourced domestically or from allied countries, and ultimately to be fully sourced from North America.
At the same time, the administration has been working to bolster domestic supply chains for critical raw materials to batteries, supplies of which are expected to come under deeper strain in the coming years.