The United States and the European Union have agreed to start negotiations on the use of minerals vital for the production of batteries for electric vehicles that are eligible for US tax credits.

US President Joe Biden and European Commission President Ursula von der Leyen announced their agreement after meeting in Washington on Friday.

The Biden administration's climate legislation passed last year includes tax credits for US consumers who purchase electric vehicles.

But EVs are eligible for the credits if their batteries use minerals procured or processed in the US or in a country with which the US has a free-trade agreement.

The EU reacted sharply to the condition, saying it puts companies in the European bloc at a disadvantage.

If the two sides conclude a new trade agreement, minerals processed and procured in the EU will be eligible for US tax credits.

The Biden administration is apparently hoping to prevent relations with the EU from deteriorating as the two sides are expected to continue acting together over Russia's invasion of Ukraine.

Japan has also asked the US to review its conditions for products eligible for tax credits.