EU Slaps Trade Sanctions on U.S. Goods (March, 2004)

MyWay News ^

[Happy2BMe]

BRUSSELS (Reuters) - The European Union imposed sanctions on the United States for the first time on Monday as a dispute over tax breaks for U.S. firms turned into a trade battle that could cost U.S. exporters $300 million this year.

The lower tax rates on exports by firms including Boeing and Microsoft have been judged an illegal subsidy by the World Trade Organization (WTO), which ruled the EU could respond by imposing up to $4 billion in sanctions a year on U.S. goods.

But European Trade Commissioner Pascal Lamy decided to apply only gradual pressure by phasing in the measures, which will hit a wide range of goods, including textiles, jewelry and toys.

The sanctions are intended to prod the U.S. Congress quickly to replace the tax breaks with measures in line with WTO rules.

"The name of the game is not retaliation, it is compliance," said a spokeswoman for Lamy.

"The day the new measures are passed by the Congress, we will stop the sanctions."

The sanctions start at $16 million as an extra five percent duty on selected U.S. goods in March.

They are due to rise one percent a month to $315 million in 2004 and $666 million if they run throughout 2005.

Based on the full $4.0 billion, the main sector to be hit would be U.S. jewelry at an estimated $1.43 billion.

Officials have tried to play down the impact of the trade row, the first time since the WTO was created in 1995 that the EU has retaliated on U.S. goods.

"This is not the beginning of a trade war. WTO disputes are all part of the system," one Washington official told reporters ahead of the March 1 deadline for the sanctions to apply.

BUSINESS CONCERNED

But EU firms have expressed worries over the escalation of a dispute that could increase costs just as the economy revives.

Lamy has said sanctions should be seen in the light of daily transatlantic trade of $1.0 billion, and the EU has coped since 1999 with more than $100 million of imposed U.S. sanctions a year in a fight over beef.

The dollar's weakness is likely to lessen the pain for U.S. exporters and the administration of President Bush has pressured Congress to change the disputed tax laws.

"The retaliatory tariffs on American exports pose a threat to... growth and may retard the creation of jobs in certain sectors of the economy," Treasury Secretary John Snow, Commerce Secretary Don Evans and U.S. Trade Representative Robert Zoellick said in a letter to Congress last week.

The U.S. Senate is expected to begin debate next week on a bill to repeal the provisions and use an estimated $50 billion in savings to lower the corporate tax rate for manufacturers.

The outlook for legislation in the House of Representatives is less certain, but industry officials hope lawmakers can agree a bill in the coming months to send to Bush.

EU-U.S. trade ties have seen bruising battles recently. The EU came close to sanctions after Bush ordered a rise in steel import duties, but the duties were ended in time.

At the same time, the EU and United States are major players in getting world trade talks back on track.

[Happy2BMe]

This is a job for Mr. J. O. (Job Outsourcing) . .

[Happy2BMe]

"But European Trade Commissioner Pascal Lamy decided to apply only gradual pressure by phasing in the measures, which will hit a wide range of goods, including textiles, jewelry and toys."

We still making this stuff in the U.S.?

Where?

[Glenn]

This is how the game will be played until the EU implodes, if it ever does.

[Happy2BMe]

Lest we forget that NAFTA is our version of EU.

[An.American.Expatriate]

But of course the WTO completely IGNORES the fact that almost every "industry" in the EU is subsidized!

Agriculture is heavily subsidized.
Steel & Coal are heavily subsidized.
Power Generation is subsidized.
Post & Telecoms are subsidized / state owned.
"Airbus" is subsized heavily.
etc....

So just how are export tax breaks for American Companies "illegal"??

I say, stop all imports / exports to the EU (and heavily tax "foreign" companies in the US) - then see how long they continue this "the US is unfair" BS.

[Cacique]

ping

[greasepaint]

French wine is infested with the spores of Bird-Flu.
Why is this dangerous substance allowed in the US?

[TheBattman]

"The name of the game is not retaliation, it is compliance," said a spokeswoman for Lamy.

The biggest lie in the whole article....

[ARCADIA]

Free trade bump... for those idiot globalist.

[TXBSAFH]

Would some one please explain to me why we are in free trade agreements again. They are not helping the people of this country one bit.

[bobjam]

I don't see the EU lasting very long in a trade war against America.

[B4Ranch]

Since our Dollar has dropped, we have been imposing a silent tax on the Europeans. They are just balancing out our economic tactics.


At an exchange rate of 0.80483
$100.00 US Dollar = 80.48 Euro
(Currency conversion rates as of 3/1/2004)

At an exchange rate of 1.24250
$100.00 Euro = 124.25 US Dollar
(Currency conversion rates as of 3/1/2004)

http://markets.usatoday.com/custom/usatoday-com/html-investor-currency.asp?currfrom=127354&currto=126274&howmany=%24100.00&SUBMIT=Go&MORE=

[B4Ranch]

"The dollar has fallen 9% against major currencies in the past year, and the drop against some currencies has been steeper. The euro has appreciated 16% against the dollar in the past year. After recently hitting a record high, it costs $1.25 to buy a euro, up from 94 cents in February 2001.

Currency movements can directly affect economies. When the dollar depreciates, it makes U.S. goods cheaper on world markets and makes foreign goods more expensive for Americans to buy."

http://www.usatoday.com/money/world/2004-02-05-g7_x.htm

[Walkin Man]

The sanctions are intended to prod the U.S. Congress quickly to replace the tax breaks with measures in line with WTO rules.

"The name of the game is not retaliation, it is compliance," said a spokeswoman for Lamy.

"The day the new measures are passed by the Congress, we will stop the sanctions."

Where are the many members of the "free trade" cult on this board??

They should be here defending the WTO and the EU as they step up their trade war against the USA.

They are the ones who support foreign trade organizations imposing their will on the US government, trampling the Constitution and people of this country, so get over here and defend it, free traitors!

[Happy2BMe]

"Notice EU industries are heavily subsidized."

Excellent point.

Also notice these ba$turd$ timing - election year.

(More "French" connections.)

[Happy2BMe]

"They are not helping the people of this country one bit."

Nor is the "outsourcing" of precious jobs.

[TXBSAFH]

Both are bleeding us dry.

[Happy2BMe]

"Currency movements can directly affect economies. When the dollar depreciates, it makes U.S. goods cheaper on world markets and makes foreign goods more expensive for Americans to buy."

There's a man who knows his chips!

[Happy2BMe]

"They (the "free trade" cultists) are the ones who support foreign trade organizations imposing their will on the US government, trampling the Constitution and people of this country, so get over here and defend it, free traitors!"

I'd just like to see the giant sucking sound and mass exodus of our jobs (outsourcing) come to a halt.

What good is free trade if nobody's got any money to trade with?

[american spirit]

Looks like NAFTA got the nose of the camel into the tent. Acutally, it looks like the FTAA is going to turn us into the American Union (Canada to S. America) which is why I think illegal immigration is just a nice little conditioning process for us to get used to livng in a banana republic. As the FTAA crystallizes, I'm real curious as to what happens to our system of laws and constitutional protections.