full article at http://dailynews.yahoo.com/h/nm/20001030/pl/economy_congress_dc_1.html Monday October 30 2:46 PM ET U.S. May Miss WTO Deadline on Tax-Break Plan WASHINGTON (Reuters) - Republican leaders in the U.S. Congress warned on Monday that a standoff over tax cuts may doom for the year legislation aimed at heading off a trade war with Europe over a multibillion-dollar program of tax breaks for American exporters. John Czwartacki, spokesman for Senate Majority Leader Trent Lott of Mississippi, and aides to Republican leaders in the House said Congress would not revive the bill if President Clinton (news - web sites) carries out his threat to veto their $240 billion tax-cut package contained in the measure. The warning came ahead of a Nov. 1 deadline set by the World Trade Organization (news - web sites) (WTO) for Congress to repeal the Foreign Sales Corporation (FSC) program, which doles out tax breaks to U.S. exporters through offshore subsidiaries. If Washington misses the deadline, the European Union (EU) could seek to impose sanctions on billions of dollars worth of U.S. goods. U.S. officials warned that move could spark an all-out trade war between the world's biggest trading powers. The WTO ruled in February that the FSC was an illegal export subsidy, handing the EU a major trade policy victory. The WTO initially gave the United States until Oct. 1 to repeal the system, but later agreed to extend the deadline to Nov. 1 to give lawmakers more time to complete their work. In response, Republicans wrapped the FSC bill into the party's end-of-the-year tax package, which won House of Representatives approval last week. Under the legislation, the United States would exclude certain categories of foreign-source income from U.S. taxation. Unlike the FSC, companies would receive the benefits directly, rather than through offshore tax havens. Despite the looming deadline, Clinton has threatened to veto the entire package, citing concerns about other tax provisions. To avert a confrontation with the EU, White House officials have urged Republicans to move the FSC bill on its own or as part of a smaller package. But Republican leaders refused to back down. ``This is the last chance for tax cuts and the last chance for FSC. The president is going to have to sign or veto,'' Czwartacki said. In accordance with Title 17 U.S.C. section 107, this material is distributed without charge or profit to those who have expressed a prior interest in receiving this type of information for non-profit research and educational purposes only.
