EU to impose trade sanctions against US from Monday

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Last updated at: (Beijing Time) Monday, March 01, 2004

EU to impose trade sanctions against US from Monday

The European Union (EU) is set to impose unprecedented retaliatory tariffs against the United States from next Monday in a bid to end tax breaks given to US exporters.

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The European Union (EU) is set to impose unprecedented retaliatory tariffs against the United States from next Monday in a bid to end tax breaks given to US exporters.

The US tax break, known as the Foreign Sales Corporation, was ruled by the World Trade Organization (WTO) in 2000 as an illegal trade subsidy. The EU, after winning the WTO approval last May, has warned it will phase in sanctions on US exports unless US Congress repeals the tax breaks.

"We've been waiting for years," said a spokesman for EU executive European Commission on Friday. He also confirmed that the sanctions would go ahead as announced last December, saying that the sanctions "are automatic."

Under its sanctions plan, the EU is to impose tariffs from March 1, starting at 5 percent and increasing monthly up to 17 percent, unless a new law was enacted by then.

That means US companies will have to pay an estimated 16.6 million US dollars in March, rising to 46.4 million dollars by December for a total of 315 million dollars in additional duties by the end of the year.

The trade dispute between America and Europe has been a war of words so far with tariffs threatened but not imposed. Analysts warned that the EU's move will change the pattern of trans-Atlantic trade relations.

The retaliation is to hit a wide array of American agricultural and manufactured goods ranging from buckwheat to nuclear reactor parts.

Source:Xinhua

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