EU Commission's US trade deal set for rocky reception in Parliament

The EU Commission made its opening move in implementing the trade agreement reached on August 21 with the United States, but the legislative proposal for tariff reductions on a wide range of US industrial and agricultural products will face a tricky path through the European Parliament which will start considering the measure next week.

This legislative move should offer immediate relief to the EU automotive sector, as the US committed to retroactively lower its 27.5% tariffs on EU cars to 15% from 1 August, once the Commission proposed the legislation. 

Among the concessions granted to the US, the Commission’s proposal provides for reducing tariffs to 0% on the vast majority of US industrial products - ranging from machinery to pharmaceutical products, some chemicals, plastics and fertilizers - for which the EU aims to break its dependence on Russia. The proposal also targets some agri-products, such as fruits, juices and certain seeds.

“This is not costly for us,” a senior EU official said, pointing out that existing tariffs levied by the bloc on these products are very low.

The Commission has also declared privileged access to its market for certain agricultural products, whose tariffs will be reduced — such as certain vegetables, fruits and grape juices.

Tariff-rate quotas are also planned for 20 product groups, including pork (25,000 tonnes), dairy products (10,000 tonnes), cheese (10,000 tonnes), and soybeans (400,000 tonnes), which will benefit from 0% tariffs below the set thresholds.

Despite a trade agreement widely seen as heavily tilted in favour of the US — with the EU facing 15% tariffs under the deal — Brussels foresees the possibility of suspending these tariff advantages on US products if the US fails to implement the 21 August agreement, or if a sudden surge in US imports on the European market poses serious risks to EU industry.

The legislative proposal needs the buy-in of the European co-legislator, the European Parliament and the EU Council, which represents the member states.

An "unbalanced" deal

MEPs responsible for monitoring trade issues will meet for what promises to be a heated session on 3 September, with some having criticised the deal as unbalanced. Sabine Weyand, Director-General of DG Trade and one of the chief negotiators, will attend to answer their questions.

“Politically, some MEPs saw the conclusion of the agreement as a humiliation and a surrender,” French liberal MEP Marie-Pierre Vedrenne told Euronews, adding: “Especially since we were promised predictability — yet Trump is already threatening tariffs on countries implementing digital legislation. The Commission is clearly uncomfortable.”

On top of the proposal on tariffs reduction, the MEPs are waiting for a second legislative proposal on the whole deal.

“We need to understand the agreement much better before we can be decisive and say yes or no,” Swedish MEP Jörgen Warborn (EPP) told Euronews, “I’m myself concerned because I have not yet understood whether the deal was compatible with WTO rules.”

According to WTO rules, any country that grants a preferential tariff to one country must extend those terms to others.

“There is a lot of turbulence when it comes to trade at these times. We need a rule-based space and not that the EU is part of breaking WTO rules,” Warborn added.

Within the S&D group, some are betting on the continuation of the negotiations to improve the deal.

“The deal is quite unbalanced and we need to see real effort from the EU Commission to obtain more exemptions and a clear path for an agreement on steel and aluminium,” a lawmaker from S&D said, adding: “Otherwise we should go back to the possible countermeasures.”

The deal published on August 21 does not address the aluminium and steel sectors, which remain subject to tariffs of up to 50%.