In a significant development for international trade, European Union's trade chief Valdis Dombrovskis expressed optimism about the potential conclusion of a critical minerals deal with the United States, citing the introduction of new EU regulations aimed at prohibiting products made using forced labor.
The European Union has been actively seeking an agreement with the United States that would enable critical minerals mined or processed in Europe to qualify for U.S. clean vehicle tax breaks under the Inflation Reduction Act (IRA).
Despite the conclusion of a recent two-day Trade and Technology Council without an agreement, negotiations between the United States and the EU are making progress. One of the primary sticking points has been commitments to labor standards, particularly the U.S.'s desire for the ability to inspect individual sites to ensure compliance.
Dombrovskis highlighted that both sides are aligned on labor rights and the eradication of forced labor, signaling a conducive environment for potential agreement. He noted that the EU's new legislation on eliminating forced labor could offer new opportunities for collaboration between the EU and the US.
The forthcoming EU law on forced labor is set to be implemented this year. It will empower the European Commission to lead investigations into alleged forced labor outside the EU, while national authorities will probe infractions within their own countries. Products found to be associated with forced labor will be withdrawn from the market.
Although the minerals deal may not have significant monetary implications for the EU due to its limited mining and processing capabilities, it holds symbolic importance. It will enhance the EU's status in global supply chains, aligning it more closely with countries like Canada and Mexico.
An EU official emphasized that the deal sends a positive signal to industry stakeholders, underscoring the EU's commitment to ethical sourcing practices.
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