It seems like a no-brainer. Both the EU and the US share as a common goal to loosen China’s stronghold over critical minerals required to power next-generation green technologies, from electric cars and wind turbines to semiconductors.

But despite this shared ambition, Washington and Brussels are yet to agree on how to move forward together. Talks on a Critical Minerals Alliance have not yet produced a final agreement, victim of the transatlantic dispute over climate change subsidies. The upshot? The US is making progress on critical minerals pacts with Japan and the UK.

The critical minerals issue is one of the main points of discussion in the transatlantic relationship. There’s agreement on the strategy — “de-risking” from China and increased government intervention. And yet, the two sides still find themselves crafting tactics over how to balance support for their own industries with the need for common action.

Minerals from lithium to lanthanum are key ingredients to fight climate change in the EU Green Deal and in the US Inflation Reduction Act (IRA). The US depends on China for more than 50% of its supply of 25 different minerals. The EU imports 98% of its annual consumptions of 17 rare metals designated as rare earths.

These minerals are vital to national security. The US Department of Defense fears production of key military supplies is at risk. Lanthanum, for example, is used to create night-vision goggles. Russia and China dominate its extraction. China dominates the germanium industry, key to producing military satellites.

Get the Latest
Sign up to receive regular emails and stay informed about CEPA’s work.

Both the EU and the US have launched ambitious plans to reduce their vulnerability. Brussels wants to process 40% of the strategic raw materials it uses by 2030 and aims to avoid relying on third countries for more than 70% of any of the 30 critical minerals. Though the US avoids mentioning specific targets, it is pouring public money and diplomatic energy into increasing non-Chinese supplies. President Joseph Biden and European Commission President Ursula von der Leyen have publicly agreed on the need to cooperate on critical minerals.

And even though both Brussels and Washington are cooperating, the two sides only started negotiating a Critical Minerals Agreement following the latest Trade and Technology Council meeting in Sweden. Negotiations only recently disentangled from the dispute over green subsidies, with Europe insisting that its automakers qualify for tax credits under the US’ Inflation Reduction Act.

Domestic politics are partly to blame. Brussels wants a quick fix — an informal deal. Washington, driven by Congress, wants a binding agreement. This demand forces the European Commission to receive a negotiating mandate from the 27 EU members, a drawn-out procedure. 

Although officials are right to remain optimistic that a critical minerals deal will eventually be reached, the US has been moving forward without the EU. The State Department has been pushing forward with a potential “minerals security partnership,” that would include 13 governments, such as France and Finland. It also is targeting agreements with non-EU Europeans, such as the UK, and has already secured a deal with Japan.

Tokyo and Washington agreed in March to allow Japanese companies to source critical minerals and benefit from IRA subsidies. When President Biden recently met UK Prime Minister Rishi Sunak at the White House, the two leaders signed an Atlantic Declaration, starting negotiations to give products sourced or refined in one country equal access and benefits in the other’s market.

A related issue is how much to depend on countries with poor labor and environmental records. Washington, for example, is debating on how much to open its market to minerals from Indonesia. South American countries can play a key role. Chile, for example, is a leading producer of lithium, copper, and iodine, among other minerals. The EU reportedly is nearing a critical minerals deal with Chile and others, while the US is weighing how much access to give the South American country to IRA subsidies. 

Canada is also a large actor. It has some of the world’s largest reserves of lithium, and has led the way with exemplary policies. Ottawa has put forward a $2.8 billion investment package targeted at critical mineral research and development. The projects, which range from mine exploration to expanded refineries, have led the EU to sign a partnership with Ottawa and the US to include Canadian minerals in its IRA.

The two allies must prioritize cooperation over competition. The best solution would be for politically aligned democracies to work together to reduce their dependency on China and strengthen a shared, resilient supply chain.

Eduardo Castellet Nogués is the Program Assistant for CEPA’s Digital Innovation Initiative.

Bill Echikson is a CEPA non-resident Senior Fellow and editor of Bandwidth.

Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions are those of the author and do not necessarily represent the position or views of the institutions they represent or the Center for European Policy Analysis.

Read More From Bandwidth
CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy.
Read More