EU co-legislators strike deal on US trade pact

Provisional agreement has been reached between the European Council and European Parliament on the terms for implementing the Trump trade pact.

This agreement came after US President Donald Trump had earlier in May threatened steep tariffs on cars imported from Europe, accusing the EU of “not complying with our fully agreed to trade deal”.

Through the trade agreement reached last July at the US President’s Scottish golf resort, the EU would remove tariffs on hundreds of US agricultural and industrial goods in exchange for a 15 per cent tariff on most exports from the EU to the USA.

Top European Parliament negotiator Bernd Lang said about Wednesday’s provisional agreement, that it’s been a rocky journey, “but it was worth it.”

By setting the commitments under the joint EU-US statement into law, this regulation becomes part of the EU’s toolkit to improve EU-US relations but also responds to pressure, he said.

He described the agreement by the co-legislators as an important step towards greater predictability in transatlantic trade relations.

The provisional agreement on Wednesday between the EU Council and EU Parliament is on two pieces of legislation to implement the EU tariff commitments.

The co-legislators agreed to add a sunset clause, where the main regulation on industrial and agri-food imports will expire on 31st December 2029. Before this date, the EU Commission will make a comprehensive assessment of its trade effects on EU industry, agriculture and small and medium-sized enterprises, and of changes in trade patterns with third countries. The Commission may present a legislative proposal to extend the regulation’s duration.

Among other things, they also agreed that the Commission will be able to suspend tariff preferences if by 31st December 2026 the US continues to apply a tariff rate higher than 15 per cent on EU steel and aluminium derivatives.

The EU’s co-legislators also agreed to establish a safeguard mechanism in the event that the tariff preferences granted to the US lead to increases in imports that threaten to cause serious injury to EU industry, including the agricultural sector. Here, the Commission will be able to start an investigation on its own initiative, or on the basis of information provided by one or more member states or by the European Parliament.

“With the introduction of the sunset clause and a strong suspension clause Parliament has substantially improved the Commission proposal. The agreement also foresees stronger review and safeguard mechanisms, and clearer and regular democratic oversight. A stable transatlantic partnership can only succeed if both sides remain committed to reliability, restraint and mutual trust,” Mr Lang said.

The International Trade Committee (INTA) will now have to organise an extraordinary committee to discuss and vote on the outcome of negotiations after having received the Coreper letter confirming Council support for the two texts. The extraordinary meeting will likely take place at the beginning of June.

Following the vote in committee, the file can be tabled for a vote at the following plenary session in the EU Parliament. It will be a closely-watched vote.

It will then be the turn of the EU Council to approve the agreed text.

Once the text has been formally approved by the co-legislators, the new legislation will then move to enter into force.