WASHINGTON – U. S. Senator Kevin Cramer (R-ND), member of the Senate Environment and Public Works (EPW) Committee, co-led a bipartisan letter expressing several concerns regarding a potential critical mineral free trade agreement between the United States and Indonesia.
The letter follows reports that the Biden administration is in negotiations with Indonesia on a limited free trade agreement for critical minerals, primarily nickel. Nickel is a key component of electric vehicles (EVs). To qualify for federal subsidies under Section 30D of tax code, it must be domestically sourced or through a free trade agreement. Such an agreement would undermine nickel development in the United States while incentivizing production in Indonesia, which operates under weak environmental and labor protections and substantial Chinese influence.
This policy is being pursued despite no full accounting of the domestic sourcing opportunities, or sourcing opportunities from countries that have a free trade agreement with the United States.
“Recognizing the substantial scale of mineral supply necessary to achieve its policy ends, Congress included countries with free trade agreements in the Section 30D eligibility requirement for battery raw materials. While additional free trade agreements were contemplated, pursuing additional critical mineral “free trade agreements” without the involvement of Congress, before the development of domestic mineral resources, and without achieving meaningful and enforceable standards for labor and environmental protections would undermine the intent of Congress and undermine the jobs and futures of our workers,” the senators wrote.
Nickel is one of the most significant minerals in the battery supply chain and is also used in several defense applications. The federal government added nickel to the U.S. critical minerals list in 2020, and nickel has been designated under Title III of the Defense Production Act of 1950, as amended, as “essential to the national defense.”
“We recognize that Indonesia plays a strategic role in the Indo-Pacific region and has the potential to become a partner in an enhanced economic relationship through the Indo-Pacific Economic Framework for Prosperity (IPEF),” the senators continued. “Minerals and metals from Indonesia currently enjoy full access to the U.S. market, as well as most favored nation tariff status. Indonesian-sourced minerals are fully available to automakers, battery manufacturers, or other energy manufacturers in the U.S. However, given the extraordinary taxpayer resources at play, we strongly believe that eligibility for the critical minerals credit must prioritize domestic producers and existing free trade agreement partners.”
“If expansion is deemed necessary, it should be directed toward countries with strong labor, human rights and environmental standards,” the senators concluded. “We urge the Administration to include these concerns in its considerations of any expanded access for critical minerals.”
Additional cosigners include U.S. Senators Tina Smith (D-MN), Tammy Baldwin (D-WI), John Fetterman (D-PA), Lisa Murkowski (R-AK), Joe Manchin (D-WV), Bill Cassidy (R-LA), Amy Klobuchar (D-MN), and Sherrod Brown (D-OH).
