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Opinion | EU must not join the US in ripping heart out of global trade system
- The US move to form what would be a ‘critical minerals buyers’ club’ goes against the WTO principle of non-discrimination
- As an advocate and beneficiary of free trade, the EU has a huge stake in preserving the multilateral trading system
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Amid disagreements between the United States and the European Union over the Inflation Reduction Act, the Biden administration has come up with a solution of sorts. In a recent interview, US Treasury Secretary Janet Yellen suggested that the US and the EU form “critical minerals free-trade agreements that would enable Europe to qualify as a free trade partner”.
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The White House is also reportedly prepared to explore the possibility with Japan and the United Kingdom.
The Biden administration’s move is intended, first of all, to soothe concerns in Europe and its allies in Asia. Some have complained that the new law discriminates against their companies in violation of global rules and have called for the EU to take the US to the World Trade Organization.
The act provides that for electric vehicles to be eligible for the full tax credit, a portion of the minerals for making the batteries that power them must come from countries that have free-trade agreements with the US. Concluding narrowly focused trade pacts on critical minerals would, the White House hopes, qualify firms from these countries for the subsidies under the plan.
The other issue that the Biden administration wants to solve with the proposal is to create a “critical minerals buyers’ club” with allies that revolves around the US.
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For some time now, the White House has been on a quest to restructure the global supply chains in chosen sectors in a way that best serves US interests. The new push is part of Washington’s effort to shift global supply chains away from China.
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