EJIL: Talk! | 12 November 2025
Non-binding instruments in international economic diplomacy: A look at the US critical minerals deals
by Lorenzo Cotula and Sunayana Sasmal
Lorenzo Cotula is the Head of the Law, Economies and Justice programme at the International Institute for Environment and Development (IIED), a policy research institute based in the United Kingdom.
Sunayana Sasmal is a Research Fellow in International Trade Law at the UK Trade Policy Observatory, University of Sussex.
Within ongoing great-power competition in the global economy, “critical” minerals have assumed considerable significance due to their essential role in the advanced technology, defence and green industries, and the geopolitical implications of concentration in their supply chains. As part of a global policy rush whereby large economies seek to secure their supply chains and reduce their dependence on China for both minerals and processing, the US recently concluded critical minerals deals with Australia, Malaysia, Thailand and Japan. In this blog, we discuss key features of the deals, their significance in critical minerals diplomacy, and their implications for wider developments in international economic law.
Legal status of the deals
All four deals are non-binding international instruments. This is reflected in their title (“Memorandum of Understanding” (MoU), in the case of the Malaysia-US and Thailand-US deals; “Framework”, for the Australia-US and Japan-US deals); in their wording (e.g. “The Participants intend to…”); and in express clarifications that the instruments do not “constitute or create rights or obligations under domestic or international law” (Section II.4 of the Japan-US Framework). These features align with trends in critical minerals diplomacy, where non-binding instruments are common practice.
However, the deals coexist with binding trade agreements. Alongside the critical minerals deal, Malaysia and the US concluded a trade agreement that will be binding upon entry into force. In it, Malaysia agreed to extensive obligations, including on critical minerals investment and trade, in exchange for a 19-percent cap on the additional tariff the US introduced in April 2025. The US has a pre-existing trade deal with Japan (July 2025) and a full-fledged free trade agreement with Australia (2004). All states are members of the World Trade Organization.
Supply chain development and integration
The deals present commonalities in policy objectives and cooperation mechanisms but retain important specificities. The Australia-US and Japan-US deals aim “to assist both countries in achieving resilience and security of critical minerals and rare earths supply chains” (identically worded fourth preambular paragraph). To this end, they envisage close cooperation in supporting geological mapping, identifying critical minerals projects, mobilising finance, leveraging stockpiling systems and, in the Japan-US deal, coordinating trade measures.
The deals also contain investment commitments. Under the Australia-US Framework, the two sides will take measures within six months “to provide at least $1 billion in financing to projects located in each of the United States and Australia” (Section I.2.b). The Framework was reportedly accompanied by Letters of Interest worth over US$2bn issued by the US Export-Import Bank to mining companies in Australia.
The Japan-US Framework refers more generally to “financial support to selected projects to generate end product for delivery to buyers in the United States and Japan and, as appropriate, like-minded countries” (Section I.2.b), within a six-month timeframe. This looser wording may partly reflect Japan’s position as a consumer, but not a mineral-rich country. That said, the Japan-US trade deal contains an investment commitment worth US$550 billion by Japan in the US, which would include the critical minerals sector.
The Malaysia-US and Thailand-US MoUs present less specific language. They envisage cooperation to develop and integrate critical minerals supply chains through information sharing and coordination on priority projects. The deals reflect Thailand and Malaysia’s position largely as US investment recipients, rather than co-investors.
According to the Thailand-US MoU, participants “expect to have first opportunity to invest, in accordance with domestic laws, in critical minerals assets that may be sold in Thailand or by a company headquartered or incorporated in Thailand” (Areas of Cooperation clause, paragraph 1). A similar commitment is framed differently in the Malaysia-US MoU: the two sides “will work in good faith to prioritize investment from the United States in critical minerals assets that may be sold in Malaysia…”. This aspect is further elaborated upon in the Malaysia-US trade agreement, with obligations for Malaysia to facilitate and promote US investment in critical minerals (Article 6.1) and develop its critical minerals sector “in partnership with U.S. companies” (Annex III, Article 6.2).
Further, the Malaysia-US MoU identifies “fair and equitable treatment of investors” among the areas for possible cooperation (Areas of Cooperation clause, paragraph 3); while the Thailand-US MoU includes a domestic processing clause that is absent in the other deals (Areas of Cooperation clause, paragraph 1).
All four deals refer to streamlining of permitting processes. Such clauses reflect geopolitical pressures to accelerate critical minerals sector development. But they also raise questions about robustness of social and environmental safeguards, particularly as the deals feature little to no text on these aspects (though they do include references to standards-based markets). A further priority across all deals concerns pricing frameworks, including mentions of “price floors” in the Australia, Malaysia and Thailand deals.
Overall, there is significant alignment between the Australia-US and Japan-US deals, and between the Malaysia-US and Thailand-US deals, and important differences between the two sets of deals. This suggests a distinction in the US policy approach to cooperation with OECD and non-OECD countries – forming bilateral “supply security response groups” with the former and promoting outward investment in the latter. Compared to the critical minerals MoUs concluded by the European Union (EU), the US deals reflect more tangible commitments on investment opportunities but less emphasis on sustainability.
Economic security alignment – and what it means for partner countries
Competition between the US and China looms large. All deals discussed here commit participants to coordinate on protecting critical minerals markets from “non-market policies and unfair trade practices” – a veiled reference to China’s trade-distortive practices in “weaponising” critical minerals supply chains, as perceived by the US (the Thailand-US clause is formulated differently).
Accordingly, the deals envisage coordinated responses that include “the adoption of standards-based systems in which those who adopt the standards can trade freely” (Australia-US Framework, Section I.4), reflecting commitments from the G7 Critical Minerals Action Plan. The deals also envisage new or strengthened systems for reviewing critical minerals asset sales on national security grounds.
The Malaysia-US trade agreement elaborates further on economic security alignment. It provides that, if the US imposes trade measures against a third country to protect its economic or national security, Malaysia must adopt or maintain measures with equivalent restrictive effect (Article 5.1). The treaty also requires Malaysia to explore investment screening mechanisms, including on critical minerals, and cooperate with the US on investment security (Article 5.2). On trade, the treaty requires Malaysia to refrain from banning critical mineral exports to the US and eliminate any rare earth element export quotas to the US (Annex III, Article 6.2).
Through the deals, the US consolidates existing alliances, such as with Australia (a mineral-rich country seeking to reduce its reliance on Chinese processors) and Japan, and mobilises Thailand and Malaysia in its competition with China. The deals may enable the US to influence its partners’ domestic policy by inducing concerted action against non-market policies, prioritisation of US investments and fast-tracking of investment permitting, based on economic security considerations. But for low and middle-income countries, having to take sides between economic security blocks risks reducing trade and investment diversification options and making them “pawns” in a global competition for economic leadership.
Reading the tea leaves: Soft law rearing its head
The US critical minerals deals highlight the deepening turn to soft-law instruments in economic diplomacy. As state responsibility derives from legal obligation in international law, these instruments lack means for legal enforcement – but they are nonetheless significant in political and practical terms. On one level, legal design involves variations in normativity even within binding treaties, as exemplified by hortatory clauses on corporate social responsibility. On another, soft-law instruments advance policy objectives through a distinctive “theory of change” centred not on legal obligations but on practical steps (e.g. information exchange, finance provision) capable of producing concrete effects.
The focused, bilateral, soft-law formats of the critical minerals instruments discussed here enabled the US to bring deals into effect fast, in a geopolitical context that is seen to require such rapid action. But these modalities also highlight questions. In bypassing domestic treaty-making processes, soft-law diplomacy can raise transparency and constitutional legitimacy concerns. Further, fragmentation through multiple bilateral, transactional negotiations (a phenomenon known as “serial bilateralism”), coupled with the network effects of many comparable deals, can contribute towards systemic shifts while enabling large economies to retain the upper hand in bilateral negotiations.
Meanwhile, cooperative emphases in soft-law instruments coexist with restrictive approaches in binding treaties, enabling larger economies to secure cooperation without jeopardising their legal entitlements. For instance, while the Thailand-US MoU mentions domestic value addition, Thailand remains exposed to legal action under applicable treaties if it promotes industrialisation through trade-restrictive measures. This interplay of binding and non-binding arrangements risks entrenching asymmetries between the global periphery and the core.
Ultimately, the value of soft-law deals is contingent upon actual implementation and observable effects. This requires interrogating how the deals will be implemented in practice (for example, what kinds of price mechanisms are envisaged and how will they work?); the extent to which the deals will restructure critical minerals supply chains; and the consequences for mineral-rich low and middle-income countries caught up in global great-power rivalries.
