National Security Advisor:
"IRA’s critical minerals clause is
insufficient…Additional measures planned"
U.S. National Security Advisor:
critical minerals clause is insufficient…
On April 27
(local time), the U.S. White House National Security Advisor Jake Sullivan
remarked that the IRA’s incentive clause was insufficient for building a
flexible supply chain for the U.S. critical minerals sector, and gave notice that
additional measures were being planned. Last year, the U.S. passed and began
enforcement of the Inflation Reduction Act, which contained provisions on
paying subsidies to Electric Vehicles made in North America for purposes of
expanding EV penetration.
Thereafter, last month the U.S. government strengthened
the conditions of critical minerals and batteries through detailed enforcement
rules, so that only those EVs that satisfy them will be paid subsidies. As a result,
the EVs of most foreign companies including Hyundai Motors and Kia Motors have been
excluded from the list of targets of subsidy payments, which has led to the
raise of complaints by the relevant foreign countries. As National Security
Advisor Sullivan has given notice that there will be additional measures from
the administrative branch on the critical minerals sector, effects will be felt
in Korean industries including batteries.
conversation at the Brookings Institute, a think-tank in Washington D.C., Jake
Sullivan introduced the current situation by saying, “Today the U.S. takes up
only 4% of global lithium production, and 13% of cobalt production. On the
other hand, at least 80% of total critical minerals are processed in China.”
Then he went on to say that the supply chain of critical
minerals for clean energy production and consumption is in a dangerous state of
becoming weaponized as in the case of oil in the 1970s and natural gas in
Europe in 2022.
“The issue of
the supply chain is one on how much production volume can be acquired, and responding
to the market in which price stability has dropped conspicuously,” he remarked.
“In terms of production volume, we shall do something similar with the major
mineral producing nations as we did in negotiating with the E.U. and Japan.”
Originally, the U.S. restricted the original producers of critical minerals for
payment of EV subsidies to the U.S. and FTA partners. But now, it is
taking/pursuing measures through separate agreements so that Japan and E.U.
countries that have not established FTAs with the U.S. can receive subsidy
“The IRA has
created a lot of incentives in regard to the market, but it is insufficient,” said
Sullivan. The National Security Advisor emphasized that “We must take
additional measures in order to reduce the gap between our current situation
and our future goals.”
ultimately we need to consider an expanded type of dialogue between the major
countries that produce minerals, and the countries that hold clean energy
technology…We need to find out whether this is what they call the ‘Minerals
Club’, or the Minerals Security Agreement’, or bringing in the partnership that
we have already begun,” added Jake Sullivan.
On this day,
National Security Advisor Sullivan maintained the existing position that China
would be considered the greatest challenge, and that China’s threat should be
reduced, but reaffirmed that this does not mean a severing of relations.
inauguration of the Biden administration, non-market practices have integrated
with the international market order, and this has proven to pose a considerable
challenge. China is paying extensive subsidies in not only traditional industrial
areas such as steel, but in future core industries such as bio. American
competitiveness is weakening not only in the manufacturing industry but in future
core technologies.” “Pursuant to the agenda of President Joe Biden, we expect
investment of USD 3.5 trillion in the public and private sectors in the coming
year,” he said. He also emphasized that the U.S. had taken measures in the form
of the Chips Act and IRA in order to resolve the weakening of competitiveness
in areas such as semiconductors and critical minerals.
emphasized that “The U.S. does not consider it possible nor appropriate to
build everything domestically. Our goal is not an isolated economy, but supply
chain flexibility and security.” He went on to explain that “The beginning is
to strengthen domestic competency, but this will lead to building competency
and resilience with trans-border partners.” “Our message is consistent. We will
not let our friends fall behind,” said the U.S. National Security Advisor. “Through
the IRA, we will build a clean energy manufacturing ecosystem based in North
America, upon which we will expand it to other regions such as Europe and
Japan. This will be a way to change the IRA from a source of conflict to that
of strength and trust,” he added. In regard to the current American trade
policy, such as industry cooperation among Korea-U.S.-Japan, and the
Indo-Pacific Economic Framework (IPEF), “Some say that such initiatives are not
traditional FTAs. The traditional model is not suitable for what we aim to
solve today…Today’s trade policy must have more significance that just reducing
tariffs,” he emphasized.
In regard to
the policy towards China in the high tech area, he said, “In important areas
related to national security, we have strengthened evaluation of foreigners’ investment,
and have also shown progress in foreign investment in sensitive technology.” “These
are customized measures, and are not a technological blockade. They are
restricted to a narrow slice of technology, and focused on a few countries that
wish to challenge the U.S. militarily,” he explained
“We want to
reduce our risk with China, but we do not wish for decoupling. Our export
controls are limited to technology that can threaten the military balance…The
U.S. is competing with China in a multitude of dimensions, but we do not wish
for conflict and confrontation,” he reaffirmed.
On the other
hand, on the comment that the U.S. is focused on checking China, yet is hurting
its allies in the process, he said, “This is the core of the conversation we had
with Europe, Japan, and South Korea’s President Yoon a couple of days ago on
his visit to the U.S….With the advent of the Biden administration, I think we
have built sufficient trust in many places, including the Indo-Pacific region…We
have effectively proven this in the semiconductor sector. Last year, our
control of exports to China consisted of remarkable detail and discipline,” he assessed,
emphasizing focus on minimizing damage to allies.