US critical minerals talks advance with EU, Japan on price floor

The US, Japan and the European Union are set to announce plans in the coming weeks to lay the foundation for a trade agreement in critical minerals, according to people familiar with the preparations.

The Office of the US Trade Representative, which has led negotiations with Brussels and Tokyo on the framework, will also head talks for a trade deal that is set to include a price floor and tariffs for the materials to counter any market distortions by China, said the people, who spoke on the condition of anonymity.

Global efforts to diversify critical minerals supply chains intensified after Beijing last year imposed sweeping export controls, including on rare earths and critical minerals, in response to President Donald Trump’s so-called Liberation Day tariffs, which set a 10% levy on nearly all American imports.

Beijing has threatened it would retaliate against the formation of a bloc that would target its exports.

The supply crunch has eased somewhat since its worst point last summer and fall, but companies still complain that they don’t receive the quantities they need and have ordered from Chinese suppliers.

US Trade Representative Jamieson Greer is aiming to start negotiations for a trade agreement with the EU and Japan in critical minerals in April, shortly after a comment period for stakeholders to weigh in ends on March 19, according to the people.

A price floor would set a minimum price for producers to incentivize investment and prevent any efforts to undercut the deal with cheaper exports from China. The Defense Advanced Research Projects Agency is lending expertise to USTR’s efforts to help come up with a pricing mechanism, the people said.

The announcement of the US-Japan plan could coincide with Japanese Prime Minister Sanae Takaichi’s visit to White House March 19, one of the people said. The EU’s timing is still being worked out but Brussels and Tokyo are closely coordinating on the contents of the plans.

The topic is also on the agenda for this year’s Group of Seven summit, the people said.

A USTR spokeswoman and Japan’s Trade Ministry declined to comment. EU spokesman Olof Gill said “the work to develop this action plan is ongoing, and the Commission is working closely with Japan, while remaining also in close contact with other global partners.”

Mexico is so far the only country that signed an action plan with the US in early February. The two sides agreed within 60 days to “discuss the feasibility and development of coordinated trade policies and mechanisms, including border-adjusted price floors for critical minerals imports, focusing in the first instance on certain select critical minerals to be determined,” according to the plan.

Provisions may include technical and regulatory cooperation, investment promotion and screening, research and development of new critical minerals technologies and coordinated stockpiling, among others.

The action plans between the EU, Japan and the US will closely resemble the document signed by Mexico, the people said.

In a joint press statement on Feb. 4, the European Commission, the Trump administration and the Japanese government said: “Such a plurilateral trade initiative could include exploring the development of coordinated trade policies and mechanisms, such as border-adjusted price floors, standards-based markets, price gap subsidies, or offtake-agreements.”

The scope of the agreement and which countries will join the push is still to be determined. Officials are assessing which critical minerals to start with and then build upon that agreement to eventually expand the scope to most or all of the minerals, the people said.

The US State Department has pursued separate bilateral memorandums of understanding with countries, including the EU and Japan.

(By Jenny Leonard)