What are the odds that the WTO will actually challenge the US?
On Tue, May 15, 2001 at 03:06:46PM -0700, Ian Murray wrote:
> WTO ruling on EU-US tax break row expected Monday
>
>
> GENEVA, May 15 (Reuters) - A panel set up by the World Trade
> Organisation (WTO) to resolve a multi-billion dollar row between
> Washington and the European Union over U.S. export tax breaks should
> issue its findings on May 21, diplomatic sources said on Tuesday.
> "It is expected to come on Monday, although that is not a legal
> deadline and there could be some delay," one diplomatic source said.
>
> The three-man panel is expected to send to Brussels and Washington its
> preliminary report on the dispute over U.S. tax relief to companies
> with offshore branches -- so called Foreign Sales Corporations (FSCs).
>
> The WTO ruled last year that the FSC programme, which grants some $4
> billion a year in tax breaks to major U.S. exporters, was an illegal
> subsidy.
>
> Following the interim report, the two sides will have some three weeks
> to comment before the dispute settlement panel makes a final ruling in
> the long-running spat that threatens to erupt into an all-out trade
> war.
>
> Brussels accuses Washington of not abiding by earlier WTO rulings that
> the FSC system -- which includes corporate giants such as plane-maker
> Boeing [BA] and Microsoft [MSFT] -- violates global trade accords.
>
> It has warned that it is ready to ask the world trade watchdog for
> permission to impose sanctions totalling some $4 billion a year -- by
> far the highest amount ever sought -- if Washington loses again but
> fails to abide by the ruling.
>
> However, U.S. Trade Representative Robert Zoellick, on a trip to
> Europe, warned the EU on Monday that such a move would be like
> dropping a nuclear bomb on the world trading system.
>
> Zoellick, who was speaking to the European Parliament's industry
> committee, said that such sanctions could send the row spinning out of
> control.
>
> "There's is no doubt that if it starts to go into affecting that much
> trade, it is like using a nuclear weapon on the trading system,"
> Zoellick said.
>
> In one of his last acts before leaving office, former President Bill
> Clinton signed tax legislation last November which Washington said
> brought it into line with the WTO rules.
>
> But Brussels says the new version is no better than the old.
>
> The two sides agreed in December to WTO arbitration and the panel was
> initially given 90 days in which to produce a report.
>
> But before the deadline expired, the panel said that it would need
> more time to reach a decision.
>
>
--
Michael Perelman
Economics Department
California State University
Chico, CA 95929
Tel. 530-898-5321
E-Mail [EMAIL PROTECTED]
