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8 September 2025

The US-EU Framework on an Agreement on Reciprocal, Fair and Balanced Trade: Resetting transatlantic trade relations while ignoring WTO rules?

By Tobias Dolle, Stella Nalwoga, and Paolo R. Vergano

On 21 August 2025, the EU and the US published their Joint Statement on a United States-European Union framework on an agreement on reciprocal, fair and balanced trade, (hereinafter, Framework Agreement). The Framework Agreement, which is not legally binding, introduces strikingly unbalanced trade concessions whereby the EU would eliminate nearly all tariffs on US-origin goods, while the US would, on top of existing tariffs, impose an additional ‘reciprocal’ tariff of 15% on EU-origin imports that are not subject to a higher most favoured nation (MFN) tariff rate, and maintain MFN tariff rates on only a few selected EU-origin goods. 

This article reviews the key terms of the Framework Agreement, assesses their compatibility with the rules of the World Trade Organization (hereinafter, WTO), and analyses the implications for businesses.

Unilateralism over multilateralism?

On 2 April 2025, basing his actions on the US’ International Emergency Economic Powers Act (IEEPA) of 1977, US President Trump announced ‘reciprocal’ tariffs ranging between 10% and 50% in order to “rebalance global trade flows”. These additional tariffs entered into effect on 8 August 2025, after having been postponed twice to allow for trade negotiations to unfold. These measures overtly violate the principle of non-discrimination and the US’ bound tariff rates in its WTO Schedule of Commitments (see Trade Perspectives, Issue No. 7 of 7 April 2025), and are currently under litigation in the US for being potentially unconstitutional.

The EU, which was to be subject to an additional ‘reciprocal’ tariff of 20%, vehemently condemned the US’ measures as an affront to the rules-based multilateral trading system anchored in the WTO rules. At the same time, the EU committed to a negotiated solution with the US Administration. Initially, the EU had proposed “zero-for-zero” tariffs with the US, which the US rejected. The eventual political understanding reached between US President Donald J, Trump and the President of the European Commission, Ursula von den Leyen, on 27 July 2025, signalled a shift towards bilateral concessions that undermine the WTO rules.

The US-EU Framework Agreement

According to the Framework Agreement published on 21 August 2025, the future EU-US Agreement on Reciprocal, Fair and Balanced Trade would “put the transatlantic trade and investment relationship on a solid footing”. More specifically, the Framework Agreement foresees commitments on addressing tariff and non-tariff measures, as well as cooperation in key priority areas, such as energy and security, as well as investment commitments by EU businesses in strategic sectors in the US. 

With respect to the tariff commitments, the Framework Agreement foresees commitments by the EU to eliminate tariffs on all US industrial goods and to extend preferential access to a broad range of US seafood and agricultural products. The US would “apply the higher of either the US Most Favored Nation (MFN) tariff rate or a tariff rate of 15%, comprised of the MFN tariff”, and “apply only the MFN tariff” to “unavailable natural resources (including cork), all aircraft and aircraft parts, generic pharmaceuticals and their ingredients and chemical precursors”, from 1 September 2025. 

The Framework Agreement also addresses EU-origin goods currently subject to tariffs based on Section 232 of the US Trade Expansion Act of 1962 and goods currently under investigation under Section 232. Notably, possible future additional tariffs on pharmaceutical products, currently subject to a Section 232 investigation, would be capped at 15% and the same tariff rate is foreseen for cars and car parts. With respect to steel, aluminium, and derivative products, the EU and the US committed to “ring-fencing their respective domestic markets from overcapacity, while ensuring secure supply chains between each other, including through tariff-rate quota solutions”. The parties further agreed to negotiate rules of origin to ensure that the “benefits of the Agreement on Reciprocal Trade accrue predominantly” to the EU and the US.

Evident WTO incompatibility

The EU-US Framework Agreement has already triggered considerable debate over its consistency with WTO obligations. While both sides portray the Framework Agreement as a pragmatic step to stabilising transatlantic trade relations, its structure raises fundamental legal concerns. 

Under Article I:1 of the WTO General Agreement on Tariffs and Trade (hereinafter, GATT) 1994, any tariff advantage granted to any country must be extended to all WTO Members. As a derogation from this non-discrimination principle, Article XXIV of the GATT allows WTO Members, within the context of a trade agreement, to grant preferential terms of market access to each other in ways that would not be extended to other WTO Members. In order to benefit from that derogation, Article XXIV(8)(b) of the GATT requires that the Agreement eliminate “duties and other restrictive regulations of commerce” with respect to “substantially all the trade” between them. A similar provision is contained in Article V of the WTO General Agreement on Trade in Services (hereinafter, GATS). While there is no official WTO interpretation of the concept of ‘substantially all trade’, it is generally considered as liberalising at least 90% of the total value of trade among the parties. 

In its current form, the Framework Agreement reveals significant liberalisation asymmetries, whereby the EU would eliminate all tariffs on US industrial and grant preferential market access for a wide range of US seafood and agricultural goods, while the US would merely reduce an already WTO-inconsistent unilateral additional tariff from 20% to 15% and maintain MFN rates on a few selected EU-origin goods. In substance, the Framework Agreement provides no trade liberalisation by the US, but only a reduction of the WTO-illegal tariffs that had been threatened.

The Framework Agreement evidently falls short of meeting the WTO legal standard for a preferential trade agreement. Falling short of that standard, the implementation of the EU’s concessions exclusively for the benefit of the US would violate the WTO’s non-discrimination principle under Article I:1 of the GATT and Article II of the GATS. Thus, in theory, the EU would be required to extend those benefits to all WTO Members. On 28 August 2025, the European Commission (hereinafter, Commission) published two legislative proposals intended to implement some of the EU’s commitments, limiting the tariff and tariff-quota advantages solely to goods originating in the US.

While Article XXIV(5)(c) of the GATT permits interim agreements if such agreements are accompanied by “a plan and schedule for the formation of such […] a free-trade area within a reasonable length of time”, the Framework Agreementonly provides a vague and non-time bound “intention” by the US and the EU to “further expanded over time to cover additional areas and continue to improve market access and increase their trade”, offering no clear plan or schedule. Finally, both parties have yet to notify the WTO Members of their Framework Agreement, as required under Article XXIV(7)(c) of the GATT in order to “enable them to make such reports and recommendations to contracting parties as they may deem appropriate”. It will likely only be a matter of time until other WTO Members raise questions concerning this and other WTO-illegal ‘trade deals’. 

In a recent interview, Ignacio Garcia Bercero, a Senior Fellow at Bruegel, a think tank based in Brussels, who acted as the EU’s Chief Negotiator for the failed negotiations on the EU-US Transatlantic Trade and Investment Partnership (TTIP), emphasised that there had “to be a clear perspective of moving towards a relationship with the US based on global trade rules, even though this might take some time”, including, “as a minimum”, the introduction of “a very clear time limitation” to the Agreement.

Limited gains and lingering uncertainty for EU businesses?

In past decades, tariffs had gradually declined through WTO rounds and tariff reduction commitments in preferential trade agreements, but, in recent years, tariffs re-emerged as a trade policy tool, particularly in US trade policy. The Framework Agreement does not leave EU businesses significantly better off than before, since it falls short of a trade liberalisation that would have further reduced MFN tariffs, instead merely providing for a ‘lesser evil’ in the form of reduced additional tariffs. On 3 September 2025, during a press conference, the Chair of the European Parliament’s Committee on International Trade (INTA), Bernd Lange, stressed that the Framework Agreement failed to deliver the legal certainty and commercial predictability promised by the Commission, pointing to the US’ expansion of Section 232 tariffs to 407 additional steel and aluminium derivative products and US President Trump’s threats of additional tariffs on countries enforcing digital taxes. Most significantly, the Framework Agreement does not include commitments to shield EU businesses from the US’ increasing use of Section 301 measures adopted under the US Trade Act of 1974, as threatened by US President Trump, on 6 September 2025, following the Commission’s imposition of a fine of USD 3.45 billion on US-based company Google for breaching EU competition rules.

Way forward 

As long as there is no final official text of the EU-US Framework Agreement, its legal contours remain uncertain, and its WTO consistency highly questionable. As both the EU and the US take steps towards implementing the Framework Agreement “in line with their relevant internal procedures”, the coming months will determine whether it will deliver some degree of certainty and genuine market opportunities. Overall, the Framework Agreement sets a troubling precedent by undermining both the WTO’s credibility and the EU’s role as its strongest proponent.

For any additional information or legal advice on this matter, please contact Paolo R. Vergano 

The Government of Indonesia revamps the regulatory framework for imports

By Imelda Jo Anastasya, Joanna Christy, and Paolo R. Vergano

On 30 June 2025, Indonesia’s Ministry of Trade enacted MoT Regulation No. 16 of 2025 on Import Policy and Regulation, which took effect on 29 August 2025. MoT Regulation 16/2025 revoked MoT Regulation No. 36 of 2023 on Import Policy. MoT Regulation 16/2025 introduces several changes to simplify technical import requirements in Indonesia and pursues the deregulation of import policies, notably: 1) A more flexible timeframe for businesses to request an extension of their ‘Import Approval’; 2) The introduction of formal definitions for the concepts of ‘Restricted Imports’, ‘Prohibited Imports’, and ‘Unrestricted Imports’, which is poised to reduce the legal ambiguities and protect domestic industries; and 3) The revocation of the ‘Import Approvals’ requirement for specific sectors.

This article discusses the key changes introduced by MoT Regulation 16/2025, their implications for stakeholders, and practical steps for businesses to consider.

Regulating imports into Indonesia

Indonesia’s new MoT Regulation 16/2025 updates the regulatory framework for imports. This Regulation was introduced following the deregulation of Indonesia’s import policies, as announced by Indonesia’s Minister of Trade, Budi Santoso, on 30 June 2025. According to a press release, Indonesia’s Coordinating Minister for Economic Affairs, Airlangga Hartarto, the Government would provide greater “ease for business actors while simultaneously creating and encouraging competitiveness”, noting that the deregulation aimed to “foster an ecosystem that continually generates employment opportunities and safeguards investment, especially in labor-intensive sectors”.

In addition to MoT Regulation 16/2025, the Government of Indonesia introduced eight dedicated MoT Regulations, each providing import requirements for Indonesia’s key business sectors, namely: 1) Textiles and textile products; 2) Agricultural and livestock goods; 3) Salt and fishery commodities; 4) Chemicals, hazardous materials, and mining materials; 5) Electronic and telematics goods; 6) Certain industrial goods; 7) Consumer goods; and 8) Used goods and non-hazardous, non-toxic waste. These regulations aim at more effectively supervising imports and at allowing the Government to adapt quickly to future changes by amending only the relevant sectoral regulation instead of the general regulatory framework for imports. The new regulations may also serve to protect domestic industries, as each of the regulations continues to require importers to obtain an ‘Import Approval’ for the covered goods, which will enable the Government to control import volumes based on domestic supply and demand conditions. 

Key novelties

MoT Regulation 16/2025 introduces several important novelties into Indonesia’s regulatory framework for imports, building on and refining the previous rules under MoT Regulation 36/2023. The changes aim at providing clearer guidance, streamline processes, and enhance regulatory oversight over import activities. 

1) Shortened timeframe for import approval extensions

      Pursuant to Article 1(20) of MoT Regulation 16/2025, in order to import goods, businesses in Indonesia must obtain an ‘Import Approval’, which is a type of business licence. This licence is valid only for a specific period, after which it must either be renewed or extended if the importer wishes to continue its import operations. To obtain an extension, the importer must submit an application to the MoT. Under the previous regime, Article 15 of MoT Regulation 36/2023required importers to submit an application for an extension no later than seven working days before the expiry date of the Import Approval. The deadline required businesses to finalise their import approval applications at least seven working days before its expiry date. Article 21 of MoT Regulation 16/2025 now provides for more flexibility by allowing submissions up to only two working days before the expiry, while allowing applications to be filed as early as thirty days prior. This means businesses now have a longer window to prepare and submit their applications.

      2) New definitions for import categories

      Article 1 of MoT Regulation 16/2025 clarifies the definitions for ‘Restricted Imports’, ‘Prohibited Imports’, and ‘Unrestricted Imports’. These concepts, although perhaps self-explanatory, were not expressly defined under MoT Regulation 36/2023. According to Article 1(4) of MoT Regulation 16/2025, ‘Restricted Imports’ refers to goods whose importation requires a specific permission by the Government. Article 1(5) defines ‘Prohibited Imports’ as goods that are prohibited to be imported, while Article 1(6) defines ‘Unrestricted Imports’ as goods that do not fall within the restricted or prohibited categories. The clarification of the definitions should reduce legal ambiguity concerning the import categories and facilitate administration, particularly the licensing procedures in which businesses need certainty on whether a product falls within the restricted, prohibited, or unrestricted categories.

      3) Revocation of sectoral Import Approvals

      Under Article 93 of MoT Regulation 16/2025, the Government revoked the ‘Import Approvals’ requirement for a certain number of goods, namely: 1) Forestry products; 2) Plastic raw materials; 3) Subsidised fertilisers; 4) Other fuels – fuel and fuel blends; and 5) Other fuels – other than fuel and fuel blends. This measure should facilitate the import of such goods into Indonesia. 

      Implications for importers

      The regulation aims at improving transparency and predictability with respect to imports. Clearer definitions of import categories might reduce ambiguities at the border and provide Customs officers with firmer legal grounds for decision-making. The more flexible deadline for Import Approval extensions allows businesses additional time to prepare their application, the definitions for import categories may help importers in categorising goods for licensing and compliance purposes, and the revocation of the ‘Import Approval’ requirement for specific goods means that importers no longer need to obtain and wait for an approval to import such goods. Under WTO rules, import licensing may be imposed as long as it complies with the GATT 1994 and the WTO Agreement on Import Licensing Procedures. Notably, in its implementation, such licensing requirements must be fair and transparent and may not restrict trade, as provided under Article 3(2) of the Import Licensing Agreement. 

      The Chairwoman of the Indonesian Employers’ Association, Shinta Widjaja Kamdani, considers the reform “a strong signal that the Government is serious about listening to and directly responding to various inputs and aspirations from the business community, including from labour-intensive sectors that are currently facing significant challenges due to weakening global purchasing power and rising production costs”. The Executive Director of the Indonesian Textile Association, Danang Girindrawardana, underlined that the Government should “make sure that policy inconsistencies do not happen”.

      To ensure compliance and avoid sanctions, importers should review the new regulatory framework and their internal processes to meet the new deadlines and update classifications in line with the new legal definitions. Strengthening compliance systems will help safeguard operations and competitiveness under the revised regulatory framework.

      For any additional information or legal advice on this matter, please contact Paolo R. Vergano 

      No more plant-based ‘bacon’? European Commission seeks to prohibit the use of animal-derived meat-related terms on plant-based meat products

      By Amanda Carlota, Ignacio Carreño García, and Tobias Dolle

      On 30 July 2025, as part of a broader review of the EU’s Common Agricultural Policy, the European Commission (hereinafter, Commission) presented its Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 1308/2013 as regards the school fruit, vegetables and milk scheme (‘EU school scheme’), sectoral interventions, the creation of a protein sector, requirements for hemp, the possibility for marketing standards for cheese, protein crops and meat, application of additional import duties, rules on the availability of supplies in time of emergencies and severe crisis and securities. With this proposal, the Commission seeks to amend Regulation (EU) No 1308/2013 of the European Parliament and of the Council of 17 December 2013 establishing a common organisation of the markets in agricultural products (i.e., the Common Market Organisation Regulation, hereinafter, CMO Regulation), introducing further meat denominations that are to be exclusively reserved for products derived from animals.

      This article analyses the Commission’s initiative, a similar amendment in another legislative initiative, and whether such proposals are in line with relevant EU case law.

      Defining ‘meat’ as edible part of an animal and introducing reserved designations

      In its Proposal, the Commission foresees to introduce into the CMO Regulation additional specific legal provisions “to protect meat-related terms in order to enhance transparency in the internal market as regards food composition and nutritional content and ensure that consumers can make well-informed choices, particularly for those seeking a specific nutritional content that is traditionally associated with meat products”.

      Notably, the Commission proposes to insert a Part Ia into Annex VII to the CMO Regulation on ‘meat and meat products designations’, which states that the term ‘meat’ “means exclusively the edible parts of an animal” and lists 29 designations that are to be “reserved for products derived exclusively from meat at all stages of marketing”. This includes terms referring generally to the type of meat itself (e.g., ‘beef’, ‘pork’, ‘veal’ and ‘chicken’), as well as to specific parts or cuts (e.g., ‘drumstick’, ‘tenderloin’, ‘T-bone’ or ‘rump’) and preparations (e.g., ‘bacon’) thereof. Currently, Part I of Annex VII to the CMO Regulation only protects designations related to the meat of bovine animals aged less than 12 months (e.g., ‘veal’ in English). The proposal appears to reflect the sentiments of at least twelve EU Member States, namely Austria, Czechia, France, Hungary, Ireland, Italy, Luxembourg, Malta, Portugal, Romania, Slovakia, and Spain, that, in June 2025, reportedly presented a note to the EU’s Agricultural and Fisheries Council stating that it was “essential that foods which imitate, mimic or substitute foods of animal origin do not mislead the consumer by their labelling as to their true nature”.

      The Commission claims that the restriction “is necessary to acknowledge the natural composition of meat and meat products”, as “meat-related terms often carry cultural and historical significance”. Notably, certain terms used in the context of meat, such as ‘burger’, ‘sausage’, and ‘steak’, have not been included in the Commission’s Proposal’s list. Given that such terms are usually in the centre of debates on plant-based meat alternatives, it may very well be that they may still be suggested or even be included in the list as the Proposal goes through the ordinary legislative procedure in the European Parliament and the Council of the EU. 

      In a separate initiative in the context of the Commission’s Proposal for a Regulation amending Regulations (EU) No 1308/2013, (EU) 2021/2115 and (EU) 2021/2116 as regards the strengthening of the position of farmers in the food supply chain, an Amendment 645 has been proposed in the European Parliament to add a new Part IIa to Annex VII to the CMO Regulation on ‘Meat, meat products and meat preparations’. With respect to ‘meat’, it states, in relevant part, that “The meat-related terms and names that fall under Article 17 of Regulation (EU) No 1169/2011 and are currently used for meat and meat cuts shall be reserved exclusively for the edible parts of the animals”. With respect to ‘meat products’, Amendment 645 states that “Names that fall under Article 17 of Regulation (EU) No 1169/2011 that are currently used for meat products and meat preparations shall be reserved exclusively for products containing meat. These names include, for example: Steak, Escalope, Sausage, Burger, Hamburger, Egg yolk, Egg white”. The proposed amendment provides that “The above-mentioned names shall not be used for any product other than the products referred to and shall exclude cell-cultured products” (see Trade Perspectives, Issue No. 13 of 30 June 2025). Notably, the most controversial terms ‘steak’, ‘sausage’ and ‘burger’ are included.

      Impact on the EU’s plant-based meat industry

      If adopted, this new regulatory approach would have a significant impact on the EU’s plant-based meat industry, which has grown rapidly in recent years due to increasing consumer demand for healthier, more environmentally friendly, and more ethical alternatives to animal-derived meat, seafood, eggs, and dairy. The European plant-based meat market was valued at USD 2.47 billion in 2024 and this figure is projected to reach USD 9.5 billion by 2033.

      Producers of plant-based meat have long used meat-related terms for their products as a handy way of conveying their taste, texture, and purpose to consumers. In a statement, the European Vegetarian Union (hereinafter, EVU) pointed out that the Court of Justice of the EU had affirmed that “existing legislation adequately safeguards consumer protection and ensures transparency in the market”, a position which the Commission had agreed to on several occasions, and, therefore, expressed surprise that the Commission would seemingly “change its views and priorities in such an unexpected manner”.

      Conflict with EU jurisprudence?

      If the Commission’s proposed changes were to be adopted, the restriction would not conflict with the decision of the Court of Justice of the European Union (hereinafter, CJEU ) of 4 October 2024, in which the CJEU ruled that “where no legal name has been adopted, a Member State may not prohibit the use of terms traditionally associated with products of animal origin to designate a product containing vegetable proteins” (see Trade Perspectives, Issue No. 20 of 4 November 2024). The judgement concerns the concept of ‘specific harmonised matters’ in Article 38(1) of Regulation (EU) No 1169/2011 on the provision of food information to consumers (hereinafter, FIR), which precludes EU Member States from adopting or maintaining national measures, unless authorised by EU law. This ruling responds to France’s attempts to prohibit certain terms on the labelling of plant-based ‘meaty’ products. The CJEU ruled that EU Member States may not prohibit the use of commonly used terms if they are not legally defined.

      As a result, EU Member States are currently not permitted to restrict manufacturers of plant-based meat substitutes from using ‘meaty’ terms, such as ‘steak’. The Commission’s proposed changes to the CMO Regulation lists harmonised terms that are to be “reserved for products derived exclusively from meat at all stages of marketing”. The Commission proposes to protect ‘meaty names’ in the meat sector in the same way as in the dairy sector. For plant-based dairy names, the debate was mostly settled on 14 June 2017, when the CJEU issued its judgment in the TofuTown case (see Trade Perspectives, Issue No. 14 of 18 July 2022), holding that purely plant-based products may not, in principle, be marketed with designations such as ‘milk’, ‘or ‘yoghurt’, because they are, under the CMO Regulation, reserved for products of animal origin.

      Outlook

      The legislative procedure in the European Parliament regarding the CMO Regulation is still in the preparatory phase, while the separate initiative awaits a decision of the European Parliament’s Committee on Agriculture and Rural Development, including on the proposed Amendment 645. Interested businesses should monitor future developments, and stakeholders should be prepared to participate in the debate by interacting with relevant EU Institutions, trade associations, and other affected stakeholders.

      For any additional information or legal advice on this matter, please contact Ignacio Carreño Garcia

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      Imelda Jo Anastasya, Amanda Carlota, Ignacio Carreño García, Joanna Christy, Tobias Dolle, Alya Mahira, Stella Nalwoga, and Paolo R. Vergano contributed to this issue.

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