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European Commission still waits for WTO ruling in US tax break row
BRUSSELS (August 23 2002) : The European Commission said on Thursday it was
still waiting for a decision by the World Trade Organisation (WTO) on how much
in sanctions it can impose on the United States in compensation for an export
tax break scheme.
The WTO has already ruled the US Foreign Sales Corp scheme, which gave tax
benefits to exporting companies, illegal under global trade rules.
The WTO is now deciding how much the EU can impose in sanctions.
A ruling was expected this week.
"We are waiting for the decision from the WTO to see what is in it and you will
be informed straight away," a European Commission spokesman told a news
conference.
The decision, originally expected in early July, has been delayed several times.
The EU has sought around $4.0 billion in sanctions for the FSC scheme, but
Washington has insisted on around $1.0 billion.
The ruling is unlikely to lead to immediate sanctions from the EU, which last
month steered clear at the last minute of slapping more than $300 million of
retaliatory trade measures on the United States in a row over US steel import
duties.
EU officials said that once the WTO makes its ruling on FSC, the Commission and
member states will consult industry on which products could be hit.
The Commission is also closely monitoring developments in the US legislature to
end FSC and is likely to hold off from sanctions if progress to scrap the scheme
is being made.
"We are not trigger happy," said one EU diplomat.
But sanctions will be held in the background if the EU concludes that no
progress is being made to end FSC.
Aerospace giant Boeing warned last month that it would be forced to cut nearly
10,000 jobs if a suitable replacement for FSC was not found.
Other US corporations such as the Walt Disney Co, Caterpillar and Archer Daniels
Midland have also benefited from the tax breaks, which date back to 1984 and
were first challenged by the European Union in 1997.
The United States revamped the FSC provisions under the Extraterritorial Income
Exclusion Act of 2000 (ETI).
They were again challenged by the EU and the United States again lost at the
WTO.
The steel row hit transatlantic trade relations after Washington in March
imposed duties on a range of steel products of eight to 30 percent.
Courtesy Business Recorder
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Pakissan.com;
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