GENEVA (Agence France-Presse) The European Union already has created a list of U.S. products that could be subject to import duties. The World Trade Organization ruled Monday that tax breaks for U.S. companies violates international trade law.
The EU submitted the guideline list to the Geneva-based WTO in November 2000 after the trade body’s first condemnation of the U.S. tax law.
The list contains key products produced by the United States including cereal, aircraft and spacecraft, iron and steel, nuclear reactors, boilers, mechanical appliances, electrical machinery, clothing and footwear, as well as aluminum, tools, toys, paper, wood, books and newspapers, and wool and cotton.
In drawing up the list, the 15-nation European Union chose a wide assortment of goods with a view to targeting a limited number of U.S. products with 100 percent import duties.
But both sides were talking about compromise yesterday.
Monday’s ruling by the WTO appellate body was the final condemnation of the United States’ foreign sales corporation (FSC) tax provision.
The FSC allows companies such as Microsoft, Boeing and General Electric to establish offshore subsidiaries that get significant tax breaks on profits earned from exports.
The WTO ruling gives the European Union the right to seek sanctions against the United States worth $4 billion the amount of damage Europe claims from the FSC system.
Several stages remain before the sanctions could be introduced.
The appellate body’s ruling is to be formally adopted later this month.