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| Cargo containers stand piled up near Port
Newark, New Jersey. The EU commission acted to ease trade tensions
with the United States, saying it would lift sanctions after US
President George W. Bush approved a repeal of illegal corporate tax
breaks.(AFP) |
The EU commission acted to ease trade tensions with the United States,
saying it would lift sanctions after US President George W. Bush approved
a repeal of illegal corporate tax breaks.
But the commission also said it will check that a new US law providing
export assistance is compatible with World Trade Organisation rules.
"Following the American president's decision, I am going to propose to
the (European Union's) Council of Ministers to put an end to sanctions,"
outgoing trade commissioner Pascal Lamy told a press conference here.
On Friday, Bush signed legislation repealling the "foreign sales
corporation (FSC)" and "extraterritorial income" provisions of the US tax
code -- a five-billion-dollar-(four-billion-euro)a-year tax break for
exporters.
In January 2003, the World Trade Organisation ruled the old law flouted
global trade rules by allowing US firms, operating through subsidiaries in
offshore tax havens, to benefit from reduced export taxes.
"I am very pleased that (the United States) respected the WTO decision
before the end of this commission's term," Lamy said six days before he is
to leave his post.
The new US law is aimed at painlessly resolving a six-year dispute over
tax breaks for US companies with foreign operations such as Microsoft,
IBM, Boeing and Caterpillar.
"This signature is good news. It's good news for the rule of law, and
it's good news for the World Trade Organisation," Lamy said, while
expressing thanks to US counterpart Robert Zoellick.
The commission nonetheless voiced concern over a so-called
"grandfathering" clause in the US reforms that maintain FSC provisions
until the end of 2006 and "in certain cases for an unlimited period after
that date".
As a result, the EU's executive arm will ask for a new WTO ruling on
Washington's revised position.
"We said we were willing to accept a transition period as long as
everything ended at the end of that period. But we have some doubts," Lamy
said.
The law that Bush signed Friday extends massive new assistance for US
companies valued at nearly 140 billion dollars over the next decade.
(Agencies) | 
Updated: 2004-10-26 10:17