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EU Seeks WTO Permission for Sanctions Against US
The European Union (EU) Friday asked the World Trade Organization (WTO) for permission to impose US$4.043 billion in sanctions against American imports.
The request is the largest sanction ever made to the global arbitrator for trade disputes, according to EU sources.
"Today the EU has requested the WTO authorize trade sanctions on the United States in the amount of US$4.043 billion in the Foreign Sales Corporation (FSC) trade dispute," said Anthony Gooch, trade spokesman for the European Commission, the executive body of the 15-nation bloc.
He said the requested amount is based on the value of the subsidy granted by the US government under the FSC scheme which the WTO ruled in February as an illegal export subsidy.
EU Trade Commissioner Pascal Lamy said: "The request is designed to protect our rights in the WTO, fully in line with the procedural agreement reached with the United States in September."
The sanctions, if enforced, will be imposed in the middle of next year due to the time-consuming WTO procedures to judge the new American FSC scheme, which was signed into law on Thursday by US President Bill Clinton.
"Although we believe the FSC replacement legislation does not solve the problem, the EU will leave it to the WTO to rule on this issue," added Lamy.
When asked why the EU has to wait for the WTO ruling instead of acting on its own like the Americans did in the trade dispute over banana and hormone-treated beef, Gooch said the EU wanted to set an example of settling trade disputes through the WTO so as to strengthen the global trade dispute regulating mechanism.
The previous edition of the FSC granted around US$4 billion a year in tax breaks to big US exporters, including aircraft manufacturer Boeing Co. and software giant Microsoft, through subsidiaries in tax havens such as the Virgin Islands, Barbados and Guam.
US officials have warned that if the EU goes ahead with sanctions, a full-scale trade war across the Atlantic could be unleashed.
The United States have already imposed US$308 million of sanctions a year against the EU in trade disputes over bananas and hormone-treated beef.
The EU imports 160 billion dollars worth of products each year from the United States and the sanctions account for 2.7 percent of the total.
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