The EU’s recently struck deal with the US, known as “Framework on an agreement on reciprocal, fair and balanced trade”, has yet to be published in detail, but the Joint Statement released by both sides noted that EU will eliminate tariffs on all US industrial goods and to provide preferential market access for a wide range of US seafood and agricultural goods. The United States commits to apply the higher of either the US Most Favored Nation (MFN) tariff rate or a tariff rate of 15%.
While the “deal” has attracted detractors as supporters, it remains up for debate on whether it would actually be signed by the White House and implemented, given the flippant decision making process of President Trump. Trump had more recently picked up on the treatment of US tech companies again, potentially jeopardising the conclusion of the deal.
Questions remain on whether such a “deal” is WTO-compliant – prima-facie, it is not, given the sectoral coverage of the tariffs. It is also odd that the EU has asked for MFN tariffs, given that such a term is only applicable under the context of WTO rules, which has been disregarded by the US from the very get go.
Interestingly, in the Joint Statement, the following points regarding the EU’s sustainability legislations were also registered, to the US’ benefit.
- Recognising that production of the relevant commodities within the territory of the United States poses negligible risk to global deforestation, the European Union commits to work to address the concerns of US producers and exporters regarding the EU Deforestation Regulation, with a view to avoiding undue impact on US-EU trade.
- Taking note of the US concerns related to treatment of US small and medium-sized businesses under the Carbon Border Adjustment Mechanism (CBAM), the European Commission, in addition to the recently agreed increase of the de minimis exception, commits to work to provide additional flexibilities in the CBAM implementation.
- The European Union commits to undertake efforts to ensure that the Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD) do not pose undue restrictions on transatlantic trade. In the context of CSDDD, this includes undertaking efforts to reduce administrative burden on businesses, including small- and medium-sized enterprises (SMEs), and to propose changes to the requirement for a harmonised civil liability regime for due diligence failures and to climate-transition-related obligations. The European Union commits to work to address US concerns regarding the imposition of CSDDD requirements on companies of non-EU countries with relevant high-quality regulations.
- Taking note of the US concerns related to treatment of US small and medium-sized businesses under the Carbon Border Adjustment Mechanism (CBAM), the European Commission, in addition to the recently agreed increase of the de minimis exception, commits to work to provide additional flexibilities in the CBAM implementation.
The EU, in acknowledging publicly that its sustainability legislations could cause harm to SMEs, has taken a commitment to address these concerns. Simplification has started since February 2025 under the Omnibus Package with a focus on the CSRD, CSDDD, and the CBAM. Although the process has been slow going, the EU-US Framework Agreement will provide the urgency needed to complete this proposal. ASEAN should also take advantage of this and ensure this commitment to simplification is upheld across all third countries, not just the US.
