A remarkable recent trend in trade policy is the pivot of countries towards issue-specific trade agreements. On the heels of standalone regional or bilateral digital trade agreements, countries are now exploring raw material access as the new frontier for bilateral trade cooperation – often in the context of the green transition.
Recently, the EU and South Korea both concluded agreements to ensure better market access to some critical raw materials for their companies:
- On 9 December 2022, the EU and Chile concluded negotiations on the EU-Chile Advanced Framework Agreement. The agreement provides EU companies with inter alia greater access to raw materials that are considered crucial for the EU’s green transition, such as lithium, copper and hydrogen. The agreement also guarantees equal treatment of EU and Chilean investors in the raw material sector.
- On 30 January 2023, South Korea and West-Australia signed a letter of intent on cooperation for the supply of certain critical raw materials, including lithium, cobalt, nickel, manganese and rare earth materials. The move was prompted by South Korea’s ambition to lead the electric vehicles market and its wish to reduce dependency on China as a source for raw materials.
Separately (and to some extent perhaps counterproductively), the EU has taken steps to organise a broader cooperation on raw materials:
- In the Green Deal Industrial Plan, which will be formally launched on 1 February 2023, the European Commission indicated that it will establish a Critical Raw Materials Club. The aim of the club is to ‘facilitate dialogue’ between companies using raw materials and raw material-rich countries, and to increase cooperation between these countries.
- In response to some of the EU’s concerns on the U.S.’ Inflation Reduction Act, the EU and the U.S. engaged in discussions on cooperation on minerals and raw materials, leaving open the possibility for other trading partners to join the initiative.
