EU lawmakers clear US trade deal to avert return to trade conflict
European Parliament Approves Duty Cuts to Fulfill Trade Agreement
By Philip Blenkinsop
Background of the EU-US Trade Deal
BRUSSELS, June 16 (Reuters) - The European Parliament approved on Tuesday cutting duties on many U.S. goods imports to fulfill the European Union's side of a trade deal struck last year, and avert a new round of tariff conflict between the world's largest trading partners.
U.S. President Donald Trump struck a deal with the European Union at his Turnberry golf course in Scotland last July under which the EU agreed to remove import duties on U.S. industrial goods and provide preferential access to U.S. farm produce in return for U.S. tariffs of 15% on most EU goods.
Implementation Challenges and Legislative Process
Delays in EU Legislation
Almost 11 months after that framework agreement, the EU had yet to pass legislation to implement those duty reductions. Trump threatened to impose "much higher" tariffs if the EU did not act by July 4.
Parliamentary Approval and Key Provisions
The EU should meet that deadline after the EU assembly backed implementing the import duty cuts by 440 votes for to 151 against. They also extended duty-free imports of U.S. lobsters, a mini-deal struck with Trump in his first term as president. Securing parliamentary approval was the legislation's last significant hurdle.
US Tariff Measures and Future Steps
US Tariff Replication and Supreme Court Ruling
The United States needs to put in place the broad 15% tariffs on EU goods. They were at that level until the U.S. Supreme Court struck down Trump's global tariffs in February.
The Trump administration plans to replicate the Turnberry deal tariffs by July 24, when an interim 10% rate regime expires.
Ongoing Uncertainties and Potential Trade Conflicts
Threats of New Tariffs
Tuesday's vote should avert Trump's July 4 tariff threat, but leaves many uncertainties. Only on Monday, Trump said he would impose 100% tariffs on French wine unless Paris eliminated its digital sales tax.
Safeguards and Expiry of Legislation
The EU legislation passed by the European Parliament expires at the end of 2029 and includes multiple safeguards allowing the EU to suspend concessions if the United States breaches the Turnberry terms.
It also calls for an EU response if Washington does not reduce tariffs of above 15% on metal derivative products, such as washing machines and cutlery, by the end of the year.
(Reporting by Philip Blenkinsop; Editing by Sudip Kar-Gupta and Barbara Lewis)
