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Bush should have never buckled under the first time. Expect more from the POS EU because of this.

EU clears sanctions over US tax breaks

08 December 2003

The European Union gave the green light Monday to multi-million-dollar trade sanctions against the United States unless illegal tax breaks for US exporters are repealed.

Fresh from declaring peace on one front of a transatlantic trade war over US steel tariffs, the EU pledged to press ahead with retaliation unless Congress repeals the Foreign Sales Corporation (FSC) law.

Tariffs starting from 200 million dollars (164 million euros) will be imposed on March 1 until the FSC tax breaks are scrapped, after EU foreign ministers nodded through the duties recommended by the European Commission.

The duties, on goods from meat and paper to nuclear power parts and semi-precious stones, will rise by 40 million dollars a month after March until the FSC regime is ended.

The World Trade Organisation (WTO) ruled in January last year that the FSC law flouted its rules by allowing thousands of US firms, operating through subsidiaries in offshore tax havens, to benefit from reduced export taxes.

The WTO had ruled that the EU could impose four billion dollars in sanctions if the FSC system was not dismantled by the end of 2003.

But the European Commission -- the EU's executive arm -- last month stopped short of imposing such an unprecedented penalty, which would have sent shockwaves through strained US-EU trade relations.

Congress is working on repealing the FSC law but with the US legislature now in recess, any decision is unlikely before next month at the earliest.

The EU says it has waited long enough after the WTO first ruled against the FSC scheme in 2000.

The tax row is one of a range of trade disputes causing anger on both sides of the Atlantic.

The EU last week lifted the threat of 2.2 billion dollars in trade sanctions against the United States after US President George W. Bush scrapped the tariffs on steel imports.

Washington, for its part, is unhappy over EU bans on genetically modified food and growth hormones in cattle. A committee of EU scientists voted Monday against approval for a type of GM sweetcorn, ensuring that that row will stay on the political agenda for some time yet.

Bush should have never buckled under the first time. Expect more from the POS EU because of this.

Yep, that what you get when you negotiate with terrorists.

Tax, tax, tax - it's all the eurocrats think about. The good news (I hear from the grapevine) is that the euro is in considerable crisis due to France and Germany's breaking of deficit rules. It's as if they have raided the accounts and got away with it. Time to do away with this wretched currency.