WTO authorises trade sanctions against United States
frank talking | 13.05.2003 10:40
"The World Trade Organisation has authorised the European Union to impose trade sanctions against the United States worth $4bn a year from 2004 in a dispute over tax breaks for American corporations." ... "The EU had complained that Washington had ignored a WTO ruling against the tax breaks which were said to amount to an illegal export subsidy." reports BBC
http://news.bbc.co.uk/1/hi/world/americas/3007481.stm US faces record sanctions
The World Trade Organisation has authorised the European Union to impose trade sanctions against the United States worth $4bn a year from 2004 in a dispute over tax breaks for American corporations.
The US, meanwhile, has said it will do its best to comply with the WTO's ruling.
The level of retaliation is the highest ever authorised by the WTO in its eight-year history but the authorisation does not mean the measures automatically take effect.
"The Commission will review the situation in the autumn," said European Trade Commissioner Pascal Lamy.
"If there is no sign that compliance is on the way at that time, the Commission would then start the legislative procedure for the adoption of counter-measures by January 1, 2004."
The office of the US Trade Representative in Washington DC tried to play down the matter.
"This is part of the process, and the EC is acting within their rights," a spokesman said, adding that the USTR was working on the US Congress to try to get the tax changes enacted.
Benefits
The EU had complained that Washington had ignored a WTO ruling against the tax breaks which were said to amount to an illegal export subsidy.
US companies such as Boeing and Microsoft have benefited from the tax break system which allows firms carrying out business through subsidiaries in offshore tax havens to benefit from reduced export taxes.
The EU has listed 95 categories of US products on which it could impose additional duties of up to 100%, including: Dairy products, cereal, meat and vegetables
Wood, leather, fur and textiles
Glass and ceramic products, iron and steel
Copper and aluminium nuclear reactors, boilers and machinery
The WTO confirmed in January 2002 that the system flouted global trade rules, and arbitrators agreed with the EU that $4bn would constitute "appropriate countermeasures" based on the trade impact of the US policy.
Steel dispute
Washington had contested the level, arguing sanctions should be not more than $956 million.
There have been several transatlantic trade disputes in recent years.
At present, there is a WTO case about US tariffs on steel imports, imposed last year.
The WTO decision has not been published yet, but it is reported to find against the US.
The EU has also lost cases in transatlantic disputes.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/1/hi/world/americas/3007481.stm
frank talking
Homepage:
http://news.bbc.co.uk/1/hi/world/americas/3007481.stm
Comments
Hide the following comment
The Empire Strikes Back
13.05.2003 15:47
By Edward Alden in Washington and Tobias Buck in Corfu
Published: May 13 2003 4:21 | Last Updated: May 13 2003 16:00
The US on Tuesday filed a long-anticipated case in the World Trade Organisation aimed at forcing the European Union to lift its de facto moratorium on genetically modified foods.
The move will further escalate trade tensions between the US and Europe, just days after the EU threatened to impose sanctions by the end of the year in a separate dispute over a $4bn subsidy for US exporters.
The US case will be joined by Argentina and Canada, which are also large producers of GM crops, as well as by Egypt, which is set to be rewarded next year with the launch of free-trade negotiations with the US. Australia, Chile, Colombia, El Salvador, Honduras, Mexico, New Zealand, Peru and Uruguay will also support the challenge.
The US argues that European restrictions on the approval of GM crops, adopted under pressure from European consumers more than four years ago, form an illegal trade barrier imposed without any evidence that the crops endanger human health or the environment.
Robert Zoellick, the US trade representative, said in January he was prepared to bring a WTO case but was blocked by the White House over fears that the dispute would hamper US efforts to win European support for the war in Iraq.
But with the conflict over and the White House angry over French and German opposition to military action, Mr Zoellick received the green light to press ahead.
The administration has also faced growing pressure from Congress and agricultural lobbying groups to bring a case. Charles Grassley, chairman of the Senate Finance Committee, demanded the administration file a WTO case, saying the EU ban "has contributed to the spread of anti-biotechnology hysteria to other parts of the world."
US corn and soybean growers are among the world's largest users of genetically modified crops, and US farmers claim they are losing as much as $300m in annual sales to Europe.
David Byrne, EU health and consumer safety commissioner, on Monday described the US timing as "eccentric". He said the moratorium would be lifted by the year's end, well before the WTO can rule on the dispute.
FT