European Union and United States sign rare minerals deal to counter China

(Patria) - The European Union and the United States signed an agreement on Friday to coordinate the supply of rare minerals needed for key industries, including defense, as China's dominance becomes a growing concern, AFP reported.

The pact marks a rare acceptance of the EU's role by President Donald Trump's administration, which often criticizes it and instead champions right-wing populists in Europe.

Showing its muscles in times of tension, Beijing has restricted exports of rare minerals needed for products including semiconductors, electric vehicle batteries, and weapons systems.

"The over-concentration of these resources, the fact that they are dominated by one or two places, is an unacceptable risk," said US Secretary of State Marco Rubio while signing a memorandum of understanding with EU Trade Chief Maroš Šefčovič.

Šefčovič told a separate press briefing that the agreement "formalizes our partnership across the entire chain, from exploration and extraction to processing, refining, recycling and repair."

The Cost of Dependence

Addressing concerns that China could retaliate against a potential multi-party minerals deal, Šefčovič said: "For us, this is really a question of economic security. It is a question of overcoming dependence."

From recent experience, "we know how expensive dependencies can be, and we have paid a huge price for being dependent on our fossil fuel sources," he added. "We simply want to learn from that experience and have a much more diversified portfolio of suppliers."

Rubio pointed out that the US and EU together are "the largest purchasers and users" of rare minerals.

"We need to make sure that these supplies and these minerals are available for our future and in ways that are not monopolized in one place or concentrated to a large extent in one place."

The action plan states that the EU and the US will explore setting minimum prices for these minerals, effectively preventing China or other external forces from flooding the market with cheap exports.

They will also consider coordinating subsidies and mineral stockpiles, and could coordinate common standards to facilitate trade across the West, and jointly invest in research.

The Office of the US Trade Representative announced that this plan will be the main mechanism for "coordinating trade policies and measures for critical mineral supply chains with the aim of concluding a binding plurilateral trade agreement."

The Trump administration had previously called for a preferential trade zone among allies in the area of minerals. Washington has also presented action plans for rare minerals with Mexico and Japan, along with a procurement framework with Australia and others.