- The Washington Times - Tuesday, September 7, 2004

More than 300 U.S. companies and trade groups yesterday pressed Congress to roll back illegal export subsidies as trade sanctions against their products steadily rise.

The World Trade Organization in 2002 ruled that export subsidies worth $4 billion a year are illegal, and the European Union this March began punishing hundreds of U.S. companies as a way to pressure Congress to repeal them.

“These retaliatory tariffs continue to hurt U.S. exports to Europe and negatively impact jobs of American workers,” said the letter, signed by Dow Chemical, Eastman Kodak, Johnson & Johnson, Mars and another 314 companies and business groups.

The letter went to all members of the House and Senate as they reconvened for their last session before the November elections.

“Resolving the … export tax issue before the election is essential to both our businesses’ bottom line and our workers’ jobs,” the letter said.

The House and Senate this year passed separate bills that would comply with the WTO ruling, but have not reconciled the two measures.

Meanwhile, EU retaliation started at 5 percent in March and rose one percentage point per month, reaching 11 percent on Sept. 1. If sanctions continue rising through December, the European Union estimated a total of $315 million in additional customs duties on products including paper, lumber, machinery, toys and jewelry.

Despite pressure from the companies to act this month, some are wary that Congress will respond quickly.

“If I were a betting man, I would bet this would get done [in a] lame duck [session], after the election,” said James Mack, vice president of tax and economic policy at the Association for Manufacturing Technology, a McLean group that represents machinery manufacturers and signed on to the letter.

Congress faces a full plate of legislative issues, including an intelligence overhaul, a spending bill to run the government, drug-import legislation, a six-year highway spending package and other matters.

The House and Senate also are divided on some components of the corporate tax bill, including final costs of the measure.

The Senate’s $170 billion bill would roll back the export subsidy and replace it with tax breaks or outright aid for domestic manufacturers, multinationals, energy companies, tobacco growers, cruise lines, archery-product makers, dog-racing tracks, Oldsmobile dealers, railroads, shipbuilders, Hollywood and NASCAR.

The $150 billion House version largely matches the Senate bill, though it leaves out the sizable energy package and finances the tobacco aid differently.

The House version does not tighten some tax rules that the Senate used to raise revenue, so it would add more to the deficit.

Businesses want differences settled this month.

“We decided to keep the pressure up so that people on the Hill understand that [the sanctions] affect real companies,” said John Meecham, spokesman for the American Forest & Paper Association, the group that organized the letter.

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