Critical Raw Materials: EU and USA Forge Pact Against China Dominance

The geopolitical map of raw material supply is to be redrawn: In Washington, representatives of the EU and the United States sealed a far-reaching strategic partnership on Friday that goes beyond mere declarations of intent. By signing a Memorandum of Understanding (MoU) and adopting an Action Plan for Supply Chain Resilience, the two economic powers are reacting to the increasing vulnerability of their industries.

Critical minerals are no longer defined as simple commodities but as strategic assets inextricably linked to national security, industrial competitiveness, and the global energy transition. At a time when lithium, cobalt, or rare earths are crucial for building wind turbines, e-cars, and semiconductors, this alliance marks a turning point in transatlantic trade policy, despite various disagreements during the second term of US President Donald Trump.

The core of the agreement, signed by EU Trade Commissioner Maroš Šefčovič and US Secretary of State Marco Rubio, covers the entire value chain. This ranges from initial exploration and mining to processing, refining, recycling, and recovery of raw materials. The partners are not only concerned with securing physical quantities but also with establishing a fair and transparent market environment.

New Instruments Against Market Distortions

One of the goals is to jointly combat unfair trade practices and non-market-conforming policies that have led to massive distortions in recent decades. With this, both sides are targeting China's dominant position without explicitly naming the People's Republic. They aim to ensure that prices for critical minerals will reflect the actual costs of responsible and sustainable extraction in the future, rather than being driven down by state subsidies. Last year, China introduced export controls for rare earths, but postponed them by a year after an agreement with US President Trump.

The accompanying action plan, presented by Šefčovič together with US Trade Representative Jamieson Greer, is even more concrete. Here, the feasibility of completely new trade policy instruments is being examined: cross-border minimum price regulations, price difference subsidies, and purchase guarantees are among the options being discussed.

These mechanisms are intended to ensure that Western mining and refining projects remain profitable even if competitors from third countries flood the market with cheap raw materials. The action plan serves as the foundation for a planned trade initiative that is intended to lead to a binding international agreement with other like-minded partners in the medium term.

Focus on Technology Integration and Prevention

In addition to price policy measures, the EU and the USA are focusing on deep technological integration. Joint geological mapping, exchange on innovative extraction technologies, and harmonization of recycling standards are planned. Crisis preparedness is also high on the agenda: through information exchange on export restrictions by third countries and coordinated stockpiling strategies, the two partners want to prepare for sudden supply stoppages.

Šefčovič emphasized that the real challenge now lies in implementation, in turning shared ambitions into effective projects. For the EU, the pact is already the 16th bilateral instrument of its kind. The EU also recently concluded its negotiations with Australia on a trade partnership, which focuses on securing critical raw materials and reducing unilateral dependencies.

(vbr)