Investment Monitor

European Parliament approves EU-US trade pact with safeguards

The deal must still secure approval from all 27 EU member states before implementation later this year.

The European Parliament voted to approve legislation enabling a trade agreement between the European Union (EU) and the US, following extended discussions over US tariff threats, reported BBC.

Lawmakers supported the measures by a margin of 417 to 154, with 71 abstentions, but included provisions designed to ensure US compliance with the terms set out in July last year.

Under the proposed agreement, tariffs on most EU goods would be set at 15%, instead of the previously threatened 30%, contingent on increased European investment in the US and the elimination of EU import duties on American industrial products.

The legislation stipulates that tariff reductions from the EU will only proceed if the US also reduces its tariffs to 15% on qualifying EU goods, specifically those containing less than 50% aluminium and steel.

Safeguards added by Members of the European Parliament (MEPs) allow for suspension of the agreement should the US introduce tariffs above this threshold or implement new duties affecting EU products.

Another provision enables the EU to halt cooperation if there is any challenge to its territorial integrity.

The vote follows several months of delays linked to President Donald Trump’s earlier proposals, which included higher tariffs and comments regarding Greenland, as well as a ruling by the US Supreme Court that declared some tariffs unlawful.

The text now requires approval from all 27 EU member states before it can take effect, with a final decision expected in April or May.

Under the arrangement, a "sunrise clause" ensures implementation only if both sides meet their obligations.

Additionally, a "sunset clause" designates that the deal will expire no later than 31 March 2028.

European Parliament Rapporteur Bernd Lange said: “With today's vote, we have a strong mandate for negotiations with the Council and we intend to make the most of it.

“MEPs will only be able to sign up to the trade terms of the deal if the regulation contains very strong and clear safeguards, and only after the US has fully respected the terms of the deal. I intend to defend this mandate firmly in the negotiations.”

The framework was agreed during a meeting between European Commission President Ursula von der Leyen and President Trump in Scotland last July.