Lamy In Washington To Check US Progress On Tax Dispute

by Mike Godfrey, Tax-News.com, Washington

04 November 2003

European Union Trade Commissioner Pascal Lamy and EU Commission President Romano Prodi are to visit Washington DC this week, where they will urge US lawmakers to speed up the repeal of tax breaks ruled illegal by the WTO, and remove tariffs on steel imports.

Lamy is to meet members of Congress to discuss what progress is being made towards the scrapping of the offending tax law, which was interpreted as an illegal subsidy by the WTO following a complaint by the EU. The Trade Commissioner will then brief EU governments on the issue on Wednesday and recommend appropriate measures in response. This could mean that sanctions are imposed by March next year, starting at a rate of 5% and rising in 1% increments monthly thereafter.

Although Congress has been presented with two bills that will eventually repeal the Extraterritorial Income Exclusion Act (one in the House and one in the Senate) it is thought that the sheer scope of the new legislation means it will not be approved in time to satisfy the EU. However, both camps have been keen to downplay the prospect of a trans-Atlantic trade war and John Sammis, head of economic policy at the US mission to the EU in Brussels, said that both sides are "making good progress on the disputes and we should avoid any unnecessary escalation".

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