EU finalises US trade pact

The European Union struck a provisional agreement on Wednesday on legislation to remove import duties on U.S. goods, clearing a major hurdle for a long-delayed transatlantic trade pact before President Donald Trump’s July 4 deadline. The accord was reached by negotiators from the European Parliament and EU member states after months of talks over how to implement the deal the bloc reached with Washington last July. The move is designed to keep the pact on track and head off a new round of U.S. tariffs on European exports. Trump had warned that failure to complete the process could trigger higher duties, including on autos. ### What exactly did EU negotiators agree on Wednesday? Cyprus, which holds the EU’s rotating presidency, said EU lawmakers and member states reached agreement early on Wednesday on the legal text needed to implement the trade pact with the United States. Bloomberg reported that the text had been finalized after months of negotiations, removing one of the main obstacles to ratification. (uk.finance.yahoo.com) Reuters reported that the legislation would remove EU import duties on U.S. goods, a central element of the deal struck with Washington in July. That provisional agreement still requires the bloc’s formal ratification steps, but Wednesday’s breakthrough means negotiators resolved disputes that had delayed implementation. ### Why was the July 4 deadline driving the timetable? (bloomberg.com) President Donald Trump said on May 7 that he would give the European Union until July 4 to ratify its trade agreement with the United States. Bloomberg reported that Trump set the deadline after speaking with European Commission President Ursula von der Leyen and warned he could raise duties on EU goods if the pact was not finalized by summer. (uk.finance.yahoo.com) May 1 became a pressure point when Trump said he was raising tariffs on cars and trucks from the European Union to 25%, arguing that the bloc had failed to comply fully with the trade agreement. Bloomberg and other reports said that threat marked an increase from the 15% tariff level previously applied under the deal. (bloomberg.com) ### What had been holding up the pact inside the EU? May 6 ended without a deal after overnight talks among EU negotiators failed to produce a final compromise. Bloomberg reported at the time that negotiators from the European Parliament and EU governments were still debating amendments and had not reached conclusive decisions. (bloomberg.com) Firstpost reported on May 20 that EU negotiators had now endorsed tariff reductions to avert a fresh clash with Washington. Bloomberg said the final text suggested Brussels had opted to move quickly rather than allow more internal political wrangling to delay the pact further. That characterization is Bloomberg’s assessment of the timing of the agreement. (bloomberg.com) ### What does the pact change for trade between the two sides? The July agreement committed the European Union to remove tariffs on U.S. goods, according to Reuters’ May 20 report on the implementing legislation. The aim was to settle a transatlantic tariff dispute and preserve access to the U.S. market for European exporters. Trump’s tariff threats have centered on autos, one of the most politically sensitive sectors in the relationship. (firstpost.com) The Japan Times and Bloomberg both reported that he had threatened to lift tariffs on European auto imports to 25% from 15% if the EU did not move fast enough to implement the deal. ### What happens next before the pact takes effect? (uk.finance.yahoo.com) July 4 is the next key date because Trump has tied the deadline for ratification to that holiday. Bloomberg reported that Wednesday’s agreement clears a major hurdle, but the European Parliament and EU member states still need to complete the remaining formal steps to put the pact in force. (japantimes.co.jp) Brussels and Washington are now working against that timetable. Reuters said the legislation agreed on May 20 covers the tariff-removal measures at the center of the pact, and the next stage is formal adoption by the EU institutions before Trump’s deadline expires. (uk.finance.yahoo.com) (bloomberg.com)