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Top Senator Attacks EU Over WTO Ruling

by Glen Shapiro, LawAndTax-News.com, New York

03 October 2005

After a WTO disputes panel confirmed its ruling against the US AJCA legislation on Friday, Senate Finance Chairman Charles Grassley issued a defiant statement attacking the EU's handling of the dispute.

The ruling states that Section 101 of the American Jobs Creation Act (AJCA) of 2004 does not comply with WTO trade rules. The EU had claimed that companies like Boeing, Caterpillar, and Microsoft will continue to benefit from illegal export tax-breaks amounting to more than $4 billion this year and more than $3 billion next year.

The AJCA of 2004 repealed the Foreign Sales Corporation (FSC) and Extraterritorial Income (ETI) Regime Acts, which the WTO had previously ruled were illegal export subsidies. Section 101 of the AJCA, however, enables U.S. companies to claim 100% of their FSC/ETI benefits in 2004, 80% in 2005, 60% in 2006, and zero thereafter.

Senator Grassley (R-Iowa) accuses the European Union of perpetuating the dispute as a tactic in the continuing squabble over subsidies to the civil aviation industry. "Their blatant linkage of WTO disputes serves as a dangerous precedent," Grassley said in a statement.

Grassley said if the WTO decision stands after a further round of appeals, any sanctions applied by the EU will unnecessarily disrupt economic relations. "Because I very much doubt that Congress will revisit this legislation," he said.

The full text of the WTO panel report can be found in the Tax News Resources section.

 

 






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