CRS: Japan Minerals Agreement Raises Congressional Authority Issues
Members of Congress, since they have raised concerns about how administration actions to strike critical minerals deals overrode their trade authority and undermined the intent of the Inflation Reduction Act, may want to consider either passing trade promotion authority that addresses the issue, or passing more laws like the one regarding the U.S.-Taiwan Initiative on 21st Century Trade, a recent report from the Congressional Research Service suggested.
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The critical minerals agreement with Japan, the only one concluded so far, covers cobalt, graphite, lithium, manganese and nickel. According to CRS, Canada is the top supplier of those minerals to the U.S., with $1.5 billion in exports; China is next, at $701 million; Norway, which is not in the EU, is third, at $594 million; Japan is 9th, at almost $240 million. The U.S. has been trying to ink a critical minerals deal with the EU, and the two governments said they would be consulting with stakeholders about the possible deal soon (see 2310200069).
In 2022, the United States imported $48.2 billion in vehicles and parts from Japan and exported $2.2 billion to Japan, but the critical minerals deal does not affect those goods.
"Some Members of Congress have raised concerns about the lack of binding or enforceable commitments in the CMA, particularly related to labor and the environment. Some Members also have criticized Treasury’s designation of Japan as an FTA partner for the purposes of the EV tax credit, based on the CMA, describing this action as overriding congressional trade authorities and undermining Congress’s intent to build up domestic EV supply chains," the report said.
It said some members also want a comprehensive free trade agreement, either through a phase two of bilateral negotiations, or rejoining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
The report noted that Indonesia, the Philippines, Argentina and Norway have expressed interest in arriving at critical minerals agreements so their exports can qualify for IRA tax credits.