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U.S., Japan Sign Critical Minerals Trade Deal Without Meaningful Labor and Environmental Standards

Today’s Agreement Could Grant U.S. Tax Breaks That Incentivize Dangerous and Dirty Mining in Developing Countries

For Immediate Release: March 28, 2022
Contact: Patrick Davis, pdavis@citizen.org 

WASHINGTON, D.C. – The United States and Japan today announced an agreement concerning trade of critical minerals, including the five most important minerals for manufacturing electric vehicle (EV) batteries. 

To qualify for the Inflation Reduction Act’s (IRA) $7,500 tax credit, a  portion of the critical minerals used in an EV’s battery must be mined from or processed in a country with which the U.S. has a “free trade agreement.” This quickly-negotiated deal comes as the U.S. Treasury Department is set to release its repeatedly delayed guidance on which agreements will be considered “FTAs” for the purposes of the EV tax credits.  

Melinda St. Louis, director of Public Citizen’s Global Trade Watch, issued the following statement:

“Today’s agreement sets a worrying precedent that so-called “free trade agreements” can be concocted out of thin air, with no public or congressional scrutiny, to appease other countries unhappy with our domestic legislation. The lip service around labor rights and environmental protections in this agreement is completely unenforceable. The parties “recognize” and “confirm their intent to” abide by basic labor standards. The only binding language in the text concerns a vague commitment to share information on labor protections. Even this limited requirement is missing from the section on environmental protections. 

“Without meaningful labor and environmental protections, it would be possible for dangerous, dirty mining corporations that violate human rights to “launder” their minerals in Japan before shipping to the United States, completely sabotaging the IRA commitment to responsible mining practices.

“The European Union, United Kingdom, and several other economies are also clamoring for special exceptions to qualify for U.S. EV tax incentives. 

“The clean economy transition the world needs will require mining of critical minerals – but to ensure a just transition, we have a responsibility to make mining as clean and safe as possible. 

“The IRA is groundbreaking climate legislation, but it’s far from perfect. The IRA’s emphasis on FTA partners for critical minerals never made much sense. A better system would have incentivized minerals mining and processing in countries that protect their workers and downstream communities. It’s not too late for the Biden administration to require those standards in this agreement and any IRA critical minerals agreements to come.”

Additional Resources: 

IAM, UAW, USW, Sierra Club and Public Citizen call for IRA to be implemented as intended despite EU threats of trade challenge

Trans Atlantic Consumer Dialogue says trade rules should not undermine domestic regulatory action 

40+ EU and US civil society orgs urge EU to drop trade threats on IRA, and for both US and EU to commit to a Climate Peace Clause 

Statement on EU’s Initial Threats to IRA in Aug 2022

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