Preferential Trade updates July 2025

Canada and New Zealand resolve dairy trade dispute

Canada and New Zealand have reached a "mutually satisfactory" resolution to a long-running dispute over access for dairy products. This agreement, negotiated in close consultation with Canadian dairy stakeholders, will result in certain minor policy changes to Canada’s TRQ (tariff rate quotas) administration, and does not amend Canada’s market access commitments. New Zealand Trade Minister Todd McClay added in a separate statement that the government was pleased the dispute has now been settled, and New Zealand exporters are guaranteed better access to the Canadian market. New Zealand launched a claim against Canada in May 2022, arguing that Ottawa’s implementation of dairy tariff rate quotas under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) trade agreement were against the its rules. Under the new agreement, Canada has committed to make commercially meaningful changes to the way it administers its dairy quotas under CPTPP, according to the New Zealand government. The Canadian government added that this means there are technical policy changes but these are limited to quotas administered under the terms of the CPTPP. Canada’s supply management system, which since the 1970s has tightly controlled supplies of dairy, eggs and poultry by restricting production and limiting imports through onerous tariffs, has become a sticking pointing in its ongoing trade negotiations with the U.S.

Indonesia and United States Reach Historic Trade Deal

President Donald J. Trump announced a landmark trade deal with Indonesia that will provide Americans with market access in Indonesia once considered impossible and unlock major breakthroughs for America’s manufacturing, agriculture, and digital sectors.

• Under this deal, Indonesia will pay the United States a reciprocal tariff rate of 19%.
• The key terms of the U.S.-Indonesia Agreement on Reciprocal Trade will include:

• Eliminating Tariff Barriers: Indonesia will eliminate tariff barriers, on a preferential basis, on over 99% of U.S. products exported to Indonesia across all sectors, including for all agricultural products, health products, seafood, information and communications technology, automotive products, and chemicals, which will create commercially meaningful market access opportunities for the full range of U.S. exports, supporting high-quality American jobs.
• Breaking Down Non-Tariff Barriers for U.S. Industrial Exports: Indonesia will address a range of non-tariff barriers, including by: (1) exempting U.S. companies and originating goods from local content requirements; (2) accepting vehicles built to U.S. federal motor vehicle safety and emissions standards; (3) accepting FDA certificates and prior marketing authorizations for medical devices and pharmaceuticals; (4) exempting U.S. exports of cosmetics, medical devices, and other manufactured goods from burdensome certification and labeling requirements; (5) removing import restrictions or licensing requirements on U.S. remanufactured goods and their parts; (6) eliminating pre-shipment inspection or verification requirements on imports of U.S. goods; (7) adopting and implementing good regulatory practices; (8) taking steps to resolve many long-standing intellectual property issues identified in USTR’s Special 301 Report; and (9) addressing U.S. concerns with conformity assessment procedures.
• Breaking Down Non-Tariff Barriers for U.S. Agriculture Exports: Indonesia will address and prevent barriers to U.S. agricultural products in the Indonesian market, including by: (1) exempting U.S. food and agricultural products from all of Indonesia’s import licensing regimes including its commodity balance policy; (2) ensuring transparency and fairness with respect to geographical indications (GIs) including meats and cheeses; (3) providing permanent Fresh Food of Plant Origin (FFPO) designation for all applicable U.S. plant products; and (4) recognizing U.S. regulatory oversight, including listing of all U.S. meat, poultry, and dairy facilities and accepting certificates issued by U.S. regulatory authorities.
• Strengthening Rules of Origin: The United States and Indonesia will negotiate facilitative rules of origin that ensure that the benefits from the agreement accrue to the United States and Indonesia, not third-countries.
• Removing Barriers for Digital Trade: The United States and Indonesia will finalize commitments on digital trade, services, and investment. Indonesia has committed to eliminate existing HTS tariff lines on “intangible products” and suspend related requirements on import declarations; support a permanent moratorium on customs duties on electronic transmissions at the World Trade Organization (WTO) immediately and without conditions; and take effective actions to implement the Joint Initiative on Services Domestic Regulation, including submitting its revised Specific Commitments for certification by the WTO. Indonesia will provide certainty regarding the ability to move personal data out of its territory to the United States through recognition of the United States as a country or jurisdiction that provides adequate data protection under Indonesia’s law. American companies have sought these reforms for years.
• Aligning on Economic Security: Indonesia has committed to join the Global Forum on Steel Excess Capacity and take effective actions to address global excess capacity in the steel sector and its impacts. The United States and Indonesia are committed to strengthening cooperation to increase supply chain resilience. This includes addressing duty evasion and cooperating on export controls and investment security. Indonesia will remove restrictions on exports to the United States for all industrial commodities, including critical minerals.
• Improving Labor Standards: Indonesia has committed to adopt and implement a forced labor import ban and remove provisions that restrict workers and unions from exercising freedom of association and collective bargaining rights.
• Notching Commercial Deals: The United States and Indonesia take note of commercial deals in the areas of agriculture, aerospace, and energy, which will further increase U.S. exports to Indonesia.

President Trump has delivered a forward-looking and tough trade deal that will benefit American workers, exporters, farmers, and digital innovators—this deal is what winning looks and will feel like for all Americans. Source: White House

Indonesia rushing to complete trade deals with Europe, and Canada 

Indonesia is rushing to complete several trade deals to diversify its export market as a hedge against the impending tariff from the US, in a move welcomed by industry players. A top Indonesian official said South-east Asia’s largest economy is seeking zero per cent tariff from trade deals with the European Union, which has 27 member countries. It is also seeking a separate agreement with the Eurasian Economic Union. The members of the Eurasian grouping are Russia, Belarus, Kazakhstan, Kyrgyzstan and Armenia. Indonesia is, additionally, accelerating to ratify a December 2024 Comprehensive Economic artnership Agreement (Cepa) with Canada, he told a panel discussion in Jakarta on July 22, organised by Bank UOB Indonesia.

EU and US agree on a trade deal, with 15% tariffs for European exports to America

On 27th July 2025, The European Union and the United States have reached a significant trade agreement aimed at easing longstanding transatlantic trade tensions and promoting economic cooperation. As part of the newly signed deal, European exports to the U.S. will be subject to a unified tariff rate of 15%, replacing a complex patchwork of duties that had previously ranged higher for various sectors. The agreement, which comes after months of negotiations, covers key industrial goods, including automobiles, machinery, chemicals, and specialty metals. Both parties emphasized that the deal strikes a balance between protecting domestic industries and maintaining open market access.

Tariff Structure:

• A flat 15% tariff will apply broadly to EU exports including automobiles, semiconductors, pharmaceuticals, and machinery.
• Strategic categories such as aircraft, aircraft components, certain chemicals, generic drugs, semiconductor equipment, some agricultural products, and critical raw materials are excluded via zero-for-zero tariff commitments.
• Steel and aluminum exports remain subject to a 50% tariff, though these may later transition to quota-based pricing 

EU Commitments:

• The EU pledges to purchase $750 billion in U.S. energy products (including LNG and nuclear fuel) over three years.
• European firms will invest $600 billion in the U.S., including procurement of military equipment.

The agreement was reached just days before higher tariffs were set to roll out on August 1, marking a close call avoided by diplomatic compromise.  President Trump described it as a “good deal for everybody” and the “biggest deal ever made,” while von der Leyen emphasized its stabilizing effect on transatlantic trade. The deal has been greeted as a relief, offering predictability and less disruption than previously threatened tariffs.

Review Mechanism Included: The deal will be reviewed after 18 months to assess economic impact and make necessary adjustments.  For more information, please refer the statement by EU President.

EU and Moldova reach agreement on a modernised trade relationship

The EU and Moldova have reached an agreement to review and update the trade terms of the EU-Moldova Deep and Comprehensive Free Trade Area (DCFTA). This marks an important step towards building a stable, long-term and balanced trade relationship, especially as Moldova advances on its path towards EU membership. The updated agreement aims to support Moldova’s European ambitions while also being mindful of EU interests, mirroring other trade agreements. While most Moldovan exports already benefit from duty-free access under the existing EU-Moldova Association Agreement, the revised terms offer further opportunities for both sides, while taking into account the sensitivities of certain agricultural sectors. The EU has agreed to increase access for the Moldovan agricultural exports not yet liberalised:

• Plums, table grapes, apples and cherries: Tariff rate quotas will be increased to reflect recent trade volumes and Moldova’s integration into the EU economy. They will also allow for greater exports, while also ensuring that Moldovan exporters can continue to export at least the same quantities as they did under the autonomous trade measures (ATMs).
• Grape juice, tomatoes and garlic: Imports of these products will be free of duty (except the specific element of the entry price system for tomatoes).

For its part, Moldova has agreed to improve access for certain EU agricultural exports: quotas will be increased for pork and poultry, and new tariff quotas will be offered for frozen boneless meat, milk and butter. Source

India–UK Free Trade Deal Sealed: Historic Pact to Double Trade by 2030

After nearly three years of negotiations beginning in early 2022, India and the UK officially signed their first-ever comprehensive FTA with a European partner on 24 July 2025, in London, with Indian Prime Minister Narendra Modi and UK Prime Minister Keir Starmer presiding over the ceremony. The agreement ratchets up an ambitious strategic partnership through provisions across trade, services, mobility, investment, and digital cooperation.

Key Provisions & Sectors Affected

Tariff Reductions

• UK to India: India will cut tariffs on 90–92% of UK goods, with 64% eligible for duty-free access on Day 1, rising to 85% over ten years.

• Whisky & Gin: Duties to drop from 150% to 75% immediately and to 40% within a decade.
• Automobiles: UK car tariffs slashed from over 100% to 10% under a quota system, transitioning toward electric vehicles and hybrids.
• Additional tariff reductions on cosmetics, electrical machinery, aerospace, medical devices, lamb, salmon, chocolate, and biscuits.
• India to UK: An astounding 99% of Indian tariff lines covering close to 100% of export value will be cleared for duty-free entry into the UK. 

Sectors include textiles, footwear, gems & jewellery, auto components, chemicals, furniture, sports goods, toys, and pharmaceuticals

Services & Labor Mobility

• Expanded access for contractual service providers, business visitors, intra-corporate transferees, and independent professionals (e.g. yoga teachers, chefs, musicians) via assured quotas and mutual recognition of qualifications.
• A Double Contribution Convention (DCC) allows Indian workers posted to the UK (and vice versa) to be exempt from UK social security contributions for up to three years, saving Indian workers and firms around ₹4,000 crore annually (~$463 million).

Non-Tariff Issues & Regulatory Cooperation

• 27 chapters cover innovation, anti-corruption, digital trade, intellectual property, customs alignment and regulatory transparency and many pioneering inclusions in an Indian FTA.
• Carbon Border Adjustment Mechanism (UK carbon tax on metal imports) remains unresolved and could impact Indian steel and aluminium exports, but an understanding was reached to avoid penalizing developing country exporters.

This India–UK FTA, signed on July 24, 2025, represents a landmark agreement; the first comprehensive trade pact India has ever concluded with a European nation and the biggest deal the UK has signed since Brexit. Aimed at doubling trade by 2030 and delivering lasting economic gains for both sides, it stands to reshape the future of UK-India commerce, but not without challenges and scrutiny on domestic sensitivities.

Ratification and implementation: Formal ratification is pending in both Delhi and Westminster; full implementation expected by mid-2026 (~1 year) depending on parliamentary timelines. Source: Economic Times

India-EFTA free trade pact to roll out from Oct 1

The free trade agreement between India and the European Free Trade Association (EFTA), which also promises infusion of $100 billion direct investments in the country from the bloc’s four members — Iceland, Liechtenstein, Norway and Switzerland – will be operational from October 1. India and EFTA nations signed TEPA on March 10 signed the free trade deal with a “binding” commitment from the bloc for infusion of direct investments of $100 billion in 15 years to create 1 million jobs. EFTA is an inter-governmental organisation set up in 1960 for the promotion of free trade and economic integration for the benefit of its four member states. Under the deal, EFTA is offering 92.2% of its tariff lines which covers 99.6% of India’s exports. The EFTA’s market access offer covers 100% of non-agri products and tariff concession on processed agricultural products (PAP).

In return, India is offering 82.7% of its tariff lines which covers 95.3% of EFTA exports of which more than 80% import is gold. The effective duty on gold remains untouched. Sensitivity related to PLI in sectors such as pharma, medical devices and processed food etc have been taken while extending offers. Sectors such as dairy, soya, coal and sensitive agricultural products are kept in exclusion list. The deal will allow duty-free exports of merchandise such as rice. It will, however, ease imports of high-value wine, chocolates and watches from these countries. Besides, TEPA would stimulate India’s services exports such as IT services, business services, personal, cultural, sporting and recreational services, education services and audio-visual services.

Philippines, Chile hold FTA discussions

The Philippines and Chile have launched the first round of talks for a free trade agreement (FTA). Last December, the Philippines and Chile signed a joint statement for the formal launch of the negotiations for a CEPA. Once completed, the FTA with Chile will be the Philippines’ first trade deal in Latin America. For the CEPA, the Philippines and Chile are looking to go beyond trade in goods and services and to cover other areas including intellectual property rights, digital economy, environment, labor and trade and gender. It said the talks represent a significant advancement in the efforts to strengthen bilateral cooperation. It also said the talks support Chile’s efforts to expand its commitment to Southeast Asia.

Türkiye, UK conclude 1st round of free trade agreement negotiations

Türkiye and the UK "successfully" finished the first round of Free Trade Agreement (FTA) talks.  It noted that in the negotiations held in Ankara with the high-level participation of the relevant institutions of both countries and reported to have been extremely productive, many critical topics were discussed in order to deepen the scope of the FTA. The updated FTA will provide new mutual market openings in agricultural products, adding that comprehensive provisions will be included to provide a mutually beneficial cooperation environment between the two countries regarding trade in services. It said joint steps that can be taken to facilitate investments will be discussed, mutual recognition of geographically marked products will be ensured, and awareness-raising steps will be taken for SMEs. The statement stressed that the strong mutual will to complete the FTA as soon as possible in a way that will contribute to the prosperity of both countries was once again confirmed during the negotiations. It noted that the annual trade volume between the two countries reached $22 billion in 2024 and that the UK is Türkiye’s seventh-largest trading partner. The next round of negotiations between Türkiye and the UK is expected to take place by the end of 2025, and the constructive and committed dialogue process paves the way for the conclusion of the FTA as a new generation agreement, it added.

U.S. – Japan signed Strategic Trade and Investment Agreement

President Donald J. Trump announced a landmark economic agreement with Japan—one of America’s closest allies and most important trading partners. 

• This historic deal reflects the strength of the U.S.–Japan relationship and Japan’s recognition of the United States as the most attractive and secure destination for strategic investment in the world.
• The agreement reaffirms the shared commitment of both nations to economic prosperity, industrial leadership, and long-term security. It delivers a powerful signal that the U.S.–Japan alliance is not only a cornerstone of peace in the Indo-Pacific, but also a driver of global growth and innovation.
• With over $550 billion in a new Japanese/USA investment vehicle and enhanced access for American exports, this agreement marks a new chapter in bilateral cooperation—one that will unleash the full potential of the U.S. economy, strengthen vital supply chains, and support American workers, communities, and businesses for decades to come.

Japan will invest $550 billion directed by the United States to rebuild and expand core American industries.

• This is the single largest foreign investment commitment ever secured by any country and will generate hundreds of thousands of U.S. jobs, expand domestic manufacturing, and secure American prosperity for generations.
• At President Trump’s direction, these funds will be targeted toward the revitalization of America’s strategic industrial base, including:

• Energy infrastructure and production, including LNG, advanced fuels, and grid modernization;
• Semiconductor manufacturing and research, rebuilding U.S. capacity from design to fabrication;
• Critical minerals mining, processing, and refining, ensuring access to essential inputs;
• Pharmaceutical and medical production, ending U.S. dependence on foreign-made medicines and supplies;
• Commercial and defense shipbuilding, including new yards and modernization of existing facilities.

• The United States will retain 90% of the profits from this investment—ensuring that American workers, taxpayers, and communities reap the overwhelming share of the benefit.
• This capital surge, combined with the trillions already secured under President Trump’s leadership, will be a key component of a once-in-a-century industrial revival.

ENSURING BALANCED TRADE THROUGH A PREDICTABLE TARIFF FRAMEWORK: As part of this agreement, imports from Japan will be subject to a baseline 15% tariff rate.

• In addition to raising billions in revenue, this new tariff framework, combined with expanded U.S. exports and investment-driven production, will help narrow the trade deficit with Japan and restore greater balance to the overall U.S. trade position.
• This approach reflects the United States’ broader effort to establish a consistent, transparent, and enforceable trade environment—one in which American workers and producers are no longer disadvantaged by outdated or one-sided trade rules.
• By aligning with this framework, Japan affirms the strength and mutual respect of the U.S.–Japan economic relationship and recognizes the importance of durable trade grounded in fairness.

Source: White House