PARIS, Feb 25 (Reuters) - France applauded on Friday a World Trade Organisation (WTO) decision that tax breaks for U.S. exporters violated global trade rules and urged the United States to change its laws by October to comply with the ruling.
Finance Minister Christian Sautter and External Trade Secretary Francois Huwart said they backed Thursday's ruling that the Foreign Sales Corporations (FSC) scheme, which affects hundreds of billions of dollars of U.S. exports, violated international trade rules.
"The United States should make their laws conform, concerning the non-agricultural section of the FSC scheme, at the latest in time for the fiscal year starting October 2000," they said in a joint statement.
For agricultural exports, the delay in bringing U.S. legisation into line should not exceed 15 months, they added.
They also noted that the sum in question was far more than that at stake in the European Union's contested banana import regime and its refusal to import U.S. hormone-treated beef.
"In helping subsidise U.S. exporters to the scale of $3.5 billion -- a figure representing the loss in tax income for the 1999 U.S. budget -- via tax exemptions, the FSC scheme has allowed these companies to benefit from a volume of public aid which is a far cry from the sums in question in the contentious bananas and hormones issues," the statement said.
The FSC would provide U.S. firms with some $4.1 billion in tax breaks in 2001 and up to $25 billion over the next five years, according to U.S. estimates. Firms like Boeing Co. (NYSE:BA) and Microsoft Corp. (NasdaqNM:MSFT) are among major beneficiaries.
The United States won WTO authorisation last year to impose more than $300 million a year in sanctions on EU exports after winning its case against the EU banana regime and its ban on hormone-treated beef.
While EU officials have stressed they are not seeking retaliation, Thursday's ruling by the WTO's appeals body was seen as a major victory for the 15-member bloc as it forces the United States to change its laws or else pay compensation or face trade retaliation.
The United States said on Thursday it was ready to launch talks aimed at settling the dispute.:
