A trade memo on electric vehicle EV battery minerals has been signed by the US and Japan.
The US Trade Representative Katherine Tai signed a limited 10-sided sectoral agreement in Washington with Tomita Koji, Japan's ambassador to the US.
The agreement aims to strengthen both countries' battery supply chains and allow Japanese automakers to access a $7,500 EV tax credit provided by the US.
The deal prohibits the two countries from enacting bilateral export restrictions on minerals required to make EV batteries, which include lithium, nickel, cobalt, graphite and manganese, according to senior Biden administration officials.
By facilitating collaboration to counter non-market policies and practices of other countries in the sector, and by conducting investment reviews of foreign investments in their critical minerals supply chains, the agreement will reduce US-Japanese dependence on China for EV materials.
The Biden administration hopes to open up access to the $7,500 per vehicle EV tax credits included in the 2022 Inflation Reduction Act through trade deals that focus on minerals.
The administration is working on a similar agreement with the EU.
According to reporters in Tokyo, Japan's trade minister Yasutoshi Nishimura said EVs made with battery minerals mined or processed in Japan were expected to meet the requirements to qualify for US tax credits, as reported by Reuters.
He said that securing minerals essential for their production is an urgent issue as the demand for electric vehicle batteries is expected to grow significantly.
Tai said that Japan is one of our most valued trading partners and this agreement will allow us to deepen our existing bilateral relationship. The agreement will be reviewed by the two countries every two years, including whether it should be amended or terminated.