On February 26, the Office of the U.S. Trade Representative (“USTR”) published a Federal Register notice soliciting public comments on a proposed plurilateral agreement to establish a “resilient and non-distorted marketplace” for trade in critical minerals among like-minded trading partners, including through the establishment of price-setting mechanisms. The comment period proposed in this notice, 21 days, is comparatively short, with comments due by March 19. Companies reliant on critical minerals supply chains and on products incorporating critical minerals may want to consider submitting comments, which will help shape U.S. proposals and negotiating positions in the formation of international agreements on critical minerals, including the establishment of price floors for such materials and coordinated trade restrictions to protect the production and supply of those materials.
Over the course of the past year, the Trump administration has pursued a number of initiatives intended to bolster U.S. supply chain security for critical minerals. These have included re-directing U.S. Government financing efforts through the Export-Import Bank (“EXIM”) and International Development Finance Corporation (“DFC”), concluding trade investigations on potential tariffs on processed critical minerals, as described in our prior alert, as well as hosting the recent Critical Minerals Ministerial in early February.
This recent Ministerial, which was hosted by Secretary of State Marco Rubio and attended by representatives from more than 50 countries, marked the launch of several initiatives by the U.S. government. These included Project Vault, led by EXIM, which seeks to establish a domestic strategic reserve for critical minerals, supported by up to $10 billion in EXIM financing. The United States also announced a number of private sector partnerships, including several through Pax Silica (the State Department’s flagship AI and supply chain security initiative), to encourage investments in critical minerals mining, refining, processing, end-use applications, recycling, and reprocessing.
Also among the deliverables that followed from the Ministerial was the launch of the Forum on Resource Geostrategic Engagement (“FORGE”) by Vice President JD Vance. FORGE, which partially repurposes the Minerals Security Partnership initiated under the Biden administration, is envisioned as a coalition of countries committed to creating incentives for diversifying global critical minerals supply chains, including through greater coordination of policies affecting critical minerals markets and supporting country-based projects that enhance the global supply of those minerals.
Vice President Vance also announced the Administration’s intention to pursue a “preferential trade zone for critical minerals protected from external disruptions through enforceable price floors.” This would be a trading bloc intended to counter China’s dominance generally in mineral extraction and processing capacity, which, together with its non-market policies, allows it to exercise significant control over global prices of many critical commodities. In line with existing Presidential directives coming out of the Section 232 investigation on critical minerals, USTR will lead these efforts to secure alignment with a wide range of trading partners and work towards a plurilateral trade agreement in critical minerals. These negotiations will take place against a backdrop of Section 232 tariffs targeting critical minerals that could be imposed at any point that the United States determines it needs leverage to reach its objectives.
In furtherance of these efforts, USTR’s February 26 notice solicits public comments on a number of different policy actions relevant to the development of a plurilateral agreement on trade in critical minerals. Some focus on traditional areas of plurilateral cooperation between the United States and its trading partners, while others—such as the establishment of reference prices or price floors for critical minerals—are more far-reaching. Among the specific topics USTR identifies for input are:
- Prioritizing certain critical minerals and trading partners for inclusion within a plurilateral agreement;
- Methods and considerations for setting target or reference prices for critical minerals through a plurilateral agreement;
- Mechanisms for adjusting prices of critical minerals and downstream products, including through the use of trade restrictions;
- Establishing common requirements and standards to address regulatory arbitrage;
- Incorporating economic security measures, such as foreign investment screening commitments;
- Monitoring and enforcement mechanisms to address breaches of the agreement, protect against circumvention, and counter concerns regarding gray or black markets; and
- Coordination mechanisms to enable participating countries to mitigate market disruptions, crises, instabilities, or other externalities.
Comments should be submitted electronically through USTR’s website. Importantly, USTR will allow interested parties to submit comments containing business confidential information (“BCI”) that will be withheld from any public version of the comments, where certified in writing that such information would not customarily be released to the public.
In addition, the notice emphasizes that USTR welcomes ongoing engagement with stakeholders on these issues, including through informal meetings or other means, and that this request for comment is not the sole opportunity for stakeholders to provide such information.
The wide range of proposals put forward by the USTR suggests that the overall scope of efforts by the administration to craft plurilateral trade measures to address critical mineral supply chain vulnerabilities is very much in flux. Comments received may also influence the implementation of framework deals already reached by the administration with U.S. trading partners on critical minerals, including various bilateral and plurilateral cooperation agreements spearheaded by USTR and the State Department. Comments can also guide Administration decisions on the extent to which future agreements will track, or build upon, agreements such as the Strategic Partnership Agreement between the United States and the Democratic Republic of the Congo, concluded in December of last year, which even contained detailed provisions regarding allocation of investment in U.S. critical minerals-related projects.
By including such a diverse range of issues relating to the establishment of a plurilateral agreement on critical minerals in its call for comments, USTR may be signaling that the contents of future agreements are still an open question, especially given the relative lack of specific, binding commitments in existing bilateral critical minerals-related agreements between the United States and its trading partners. By soliciting feedback on such a broad array of potential provisions, USTR is providing the public with an opportunity to shape one of the most active, and outward-facing, aspects of the administration’s economic policy agenda.
Covington regularly advises clients on critical minerals issues and related supply chain questions and is available to assist companies interested in submitting comments as part of USTR’s public consultation process and engaging the different Administration players in the critical minerals space. Covington’s diverse team of trade and policy experts is uniquely positioned to provide thoughtful strategic advice to clients on these issues and related developments. If you have any questions concerning the materials discussed in this update, please contact the members of our team.
* * *
If you have any questions concerning the material discussed in this client alert, please contact the members of our Trade Policy practice.
Back
