Canada defers spot in US critical minerals pact: Globe

Canada won’t immediately take part in a United States plan to assemble allies into a preferential trade bloc for critical minerals, Foreign Affairs Minister Anita Anand told the Globe and Mail in an interview. 

Ottawa doesn’t want to give away a key bargaining chip as it enters negotiations with Washington this year on the North American free trade agreement, Anand said in Thursday’s report. The deal known north of the border as CUSMA, formerly NAFTA, is scheduled for its required six-year review by July. 

The response comes after the U.S. convened a Critical Minerals Ministerial meeting in Washington D.C. on Wednesday featuring officials, including Anand, from more than 50 countries. U.S Vice-President JD Vance and Secretary of State Marco Rubio hosted the event.

U.S. Trade Representative Jamieson Greer said the U.S., European Commission and Japan will work together to “develop action plans for critical minerals supply chain resilience” to weaken China’s dominance in the market for materials used in defence and high-tech industries. Washington wants to avoid supply chain disruptions that have at times hobbled the auto and defence industries over the past few years. 

Price floors

Under these action plans, Grier and Vance said nations will develop coordinated trade policies and mechanisms, such as border-adjusted price floors, that can mitigate critical mineral supply chain vulnerabilities.

Vance said the plan is to establish “reference prices for critical minerals at each stage of production”, stating that “for members of the preferential zone, these reference prices will operate as a floor maintained through adjustable tariffs to uphold pricing integrity”.

This would lay “the groundwork for a binding plurilateral agreement on trade in critical minerals with like-minded partners,” Grier said. A memorandum of understanding is expected within 30 days for the parties to commit to the joint efforts, according to a joint statement.

Canada is already part of the 2020 U.S. Joint Action Plan on Critical Minerals Collaboration, an agreement focusing on securing supply chains for essential minerals. While primarily a bilateral agreement, it aligns with broader partnerships involving countries like Australia, Japan, the European Union and South Korea, aiming to reduce reliance on non-market economies. 

Mexico plan

Separately on Wednesday, the U.S. announced a partnership with Mexico to address vulnerabilities in the critical mineral supply chain. The parties unveiled a 60-day action plan focused on developing trade policies centred on critical minerals. These would include consultations on price floors in a binding agreement.

As part of the plan, the countries are expected to identify specific mining, processing and manufacturing projects for critical minerals in both countries and certain third countries, though no further details were provided.

Trade Representative Greer said the U.S.-Mexico collaboration underscores “the countries’ shared commitment to address global market distortions that have left North American supply chains vulnerable to disruptions.”

‘Failing’ market

The agreements are designed to encourage investment outside China and reduce reliance on Beijing for rare earths and other critical minerals used in products from electric vehicles to semiconductors, U.S. trade officials said.

Mining and processing projects need stable prices to proceed and a “preferential trade centre” for critical minerals would help protect them from external disruptions, they said.

“Today, the international market for critical minerals is failing,” Vance said in his opening remarks of Wednesday’s summit. “Consistent investment is nearly impossible, and it will stay that way so long as prices are erratic and unpredictable.”

His comments built on President Donald Trump’s Monday announcement of plans for a nearly $12-billion critical minerals stockpile, part of his intensified efforts to bolster the domestic supply chain.