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Paris, September 02, 2025 Implementation
of the Trade Agreement Between the European Union and the United
States: Procedural Steps, Legal Issues, and Political Risks 1. What is the legal scope of the announcements made on July 27 in Scotland? The
July 27 agreement between the President of the United States and the
President of the European Commission is not a traditional bilateral
trade agreement that becomes legally binding once each party has
completed the approval procedures required under its domestic law.
Rather, it consists of a series of unilateral and reciprocal commitments
made by both sides. These
commitments are set out in a document finalized after the Turnberry
meeting and published on August 21 under the title Framework on an
Agreement on Reciprocal, Fair, and Balanced Trade (the “Framework
Agreement”). This “framework” does not itself constitute a legally
binding agreement. Politically, however, it reflects the EU’s
acknowledgment of U.S. concerns about “trade imbalances” and includes
pledges of measures or intentions that must still be translated into
legal acts by both the EU and the U.S. administration in the area of
tariffs. 2. How will the U.S. decision to apply a 15% tariff on goods exported to the U.S. from Europe be implemented? The
U.S. administration has indicated that it intends to implement this
decision “promptly,” provided that the EU first adopts legislation
eliminating tariffs on all industrial goods exported from the United
States to Europe and grants preferential treatment to U.S. exports of
certain seafood and agricultural products. To this end, on August 28 the
European Commission submitted a legislative proposal to the Council and
the European Parliament. Adoption of this proposal is therefore a
prerequisite for the U.S. commitment, in particular the reduction of
tariffs on European car exports from 27.5% to 15%. The
sequential nature of the implementation of these commitments, combined
with the lack of symmetry in the applicable duties (0% for exports to
the EU versus 15% for U.S. tariffs, except in certain sectors such as
aeronautical components and generic pharmaceuticals), has fueled
criticism of the imbalance in the July 27 agreement. Such criticism may
delay adoption of the preferential measures proposed by the Commission,
particularly in the European Parliament, and could in turn postpone U.S.
decisions. 3. Are the commitments made by the EU to the US compatible with the EU's legal obligations? Serious
doubts have been raised about the compatibility of the July 27
agreement with WTO rules. While these rules allow the parties to
conclude bilateral free trade agreements, the “reciprocal” commitments
made at Turnberry do not legally qualify as such an agreement. Although
the Commission is seeking to defend them, the WTO’s founding
principles—namely the most-favored-nation rule and the principle of
non-discrimination—appear to have been breached. In addition, the
European Union could face counterclaims from countries with which it has
recently concluded free trade or economic partnership agreements, as
those countries would now be treated less favorably than the United
States, particularly with respect to their exports of industrial goods
to the EU. 4.
What is the legal scope of the EU's commitment to purchase $750 billion
worth of US energy products by 2028 and make an additional $600 billion
in investments in the US? The
day after the Turnberry meeting, the Commission maintained that these
announcements were statements of intent rather than legal commitments.
In any case, it is difficult to identify a legal basis that the EU could
use to formalize and enforce such commitments, since they relate to
investments or purchases made by European companies. President
Trump responded to the Commission’s attempts to downplay the
commitments by threatening to reinstate tariffs of more than 15 percent
if the EU were to breach what he regards as an integral part of the July
27 agreement. 5.
Through the Commission, the EU has signed up to a series of additional
political commitments that are difficult to implement and could
therefore weaken its position vis-à-vis the US administration. These commitments include: - ensuring that the CSRD and CSDDD directives do not create “undue restrictions” on transatlantic trade
- introducing
additional flexibility for U.S. small and medium-sized enterprises in
applying the carbon border adjustment mechanism
- the EU’s commitment not to “maintain or adopt” telecommunications network usage fees
- seeking an exemption for U.S. industries from European deforestation regulations
- opening discussions on non-tariff barriers affecting food and agricultural exports
These
are sensitive matters that will require adjustments to existing
regulations according to a timetable that is difficult to predict. 6. The application of European legislation and regulations to digital services remains an important political issue. The
day after the July 27 agreement was reached, the Commission stressed
that it did not concern digital regulation and that the EU had fully
preserved its decision-making autonomy in this area. The framework
published on August 21 indeed contains no provisions on this subject.
However, on August 25 President Trump threatened to impose “substantial
tariffs” on countries that do not roll back their digital market
regulations, implicitly targeting the European Digital Markets Act (DMA)
and Digital Services Act (DSA). Given
the firm position of the EU institutions and member states on
maintaining and effectively implementing these regulations, this issue
is likely the main factor contributing to the fragility and
unpredictability of the current framework for trade relations between
Europe and the United States. |