By Andrea Shalal and Simon Lewis
WASHINGTON, April 24 (Reuters) – The U.S. and the European Union on Friday deepened their coordination on critical minerals as part of a broader push by Western allies to loosen China’s grip on materials crucial to advanced manufacturing.
U.S. Secretary of State Marco Rubio and European Union Trade Commissioner Maros Sefcovic signed a memorandum of understanding for a partnership on producing and securing critical minerals, with a specific action plan for trade announced separately.
Rubio did not mention China in his remarks, but said the preliminary agreement with Brussels reflected growing awareness among Western allies of the importance of supply chains and critical minerals for their economic success.
China has used its chokehold on the processing of many minerals as geo-economic leverage, at times curbing exports, suppressing prices and undercutting other countries’ ability to diversify sources of the materials used to make semiconductors, electric vehicles and advanced weapons.
“The over-concentration of these resources, the fact that they’re dominated by one or two places, is an unacceptable risk. We need diversity in our supply chains,” Rubio said before signing the memorandum.
Sefcovic told reporters he hoped the memorandum would jumpstart the overall push, and expressed hope that some initial pilot projects to test the price floor mechanism could kick off before the end of the year.
“The direction is clear,” he said. “Critical minerals … are the core of every industry shaping the future.”
U.S. Trade Representative Jamieson Greer, who also met with Sefcovic on Friday, announced a separate action plan to coordinate trade policies on critical minerals to address what they called “the non-market policies and practices that have distorted critical minerals supply chains.”
Greer said Washington and Brussels would explore how trade measures, such as border-adjusted price floors, could strengthen domestic critical minerals industries and downstream sectors critical to industrial competitiveness.
Speaking at the State Department, Sefcovic said the agreements would strengthen the transatlantic relationship and ensure faster work on their joint goals.
“I totally agree with Mr. Secretary (Rubio) that now the real test will be the execution of this project. How can we transform these agreements which we are signing into concrete, tangible projects to deliver for our business operators?”
‘PERVASIVE NON-MARKET POLICIES AND PRACTICES’
Washington and Brussels first announced their intent to develop an action plan in February when U.S. Vice President JD Vance unveiled plans to create a preferential trade bloc for critical minerals, potentially with coordinated price floors.
Washington already has signed similar action plans with Japan and Mexico.
The U.S.-EU action plan said it was imperative to address “pervasive non-market policies and practices (that) have left critical minerals supply chains of market-oriented economies vulnerable to a myriad of disruptions, including economic coercion.”
The plan said the longer-range view was on developing a plurilateral initiative with like-minded partners on trade in critical minerals that could bolster supply chain resilience for critical minerals for all.
The U.S. and EU will discuss various measures and mechanisms, it said, including coordinated trade policies and mechanisms based on reference prices, such as border-adjusted price floors, standards-based markets, price gap subsidies, or offtake agreements, focusing on mutually agreed select critical minerals and associated supply chains.
They also agreed to examine other possible measures, including standards for mining, processing, recycling, or trade in critical minerals; technical and regulatory cooperation; investment promotion and screening cooperation; and coordinated rapid responses to prevent disruptions and crises. Stockpiling cooperation is another possible measure, it said.
(Reporting by Andrea Shalal and Simon Lewis; Editing by Chizu Nomiyama and Paul Simao)
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