European Union Trade Commissioner Pascal Lamy said Friday that a US House vote repealing a corporate tax break deemed illegal by the World Trade Organization moved the United States a "step" closer to resolving its longstanding dispute with the EU.
"I have repeatedly stated that our objective remains the withdrawal of the US illegal subsidy, and compliance with the WTOs findings," Lamy said in a statement.
"Today ... we are a step closer to this objective."
On Thursday, the US House of Representatives approved a major corporate tax reform seeking to bring Washington into compliance with a World Trade Organization ruling and end European trade sanctions.
The legislation repeals a tax break deemed illegal by the WTO and replaces it with 155 billion dollars (128.3 billion euros) in corporate tax cuts over the next decade.
Its core feature repeals the "foreign sales corporation" (FSC) measure, which offers tax breaks to US corporations operating through subsidiaries in off-shore havens. It was that measure that prompted the European Union to impose retaliatory tariffs on a range of US goods on grounds that it amounted to an unfair subsidy for big US exporters.
The House and the Senate, which approved a similar bill repealing FSC tax breaks on May 11, will now try to reconcile their versions to allow the plan to be submitted to the White House.
"I very much hope that both the House and Senate can now agree on a final text so that an FSC ... repeal bill is rapidly adopted and signed into law by President Bush," Lamy said.
WTO arbitrators agreed with Europe that just over four billion dollars would constitute "appropriate countermeasures" against the US policy.
EU sanctions began March 1. If the sanctions continued until the end of 2004, the extra duties would be worth a total 315 million dollars, according to the EU.
"It goes without saying that the moment WTO compliant legislation becomes law, the EU will immediately repeal the countermeasures. That will be good news for all involved in transatlantic trade," the EU trade commissioner said.
"Lets hope the time will shortly come to put this longstanding dispute behind us once and for all."Agence France Presse:
