US Exporters Urge Swift Passage Of Corporate Tax Bill

by Leroy Baker, Tax-News.com, New York

21 September 2004

More than 400 US exporters wrote to Congress last week urging lawmakers to complete work on legislation intended to convince the European Union to lift tariffs on US goods imposed with the agreement of the WTO.

The EU began imposing tariffs in March 2004 at a rate of 5% in response to a lack of action by Congress to repeal the ETI legislation offering tax concessions to US exporters, which has been ruled illegitimate by the WTO.

Currently standing at 12%, these sanctions are being applied to more than 1,600 US exports, with a total sales value in the region of $3 billion. Unless Congress passes new legislation, this levy is scheduled to rise at 1% per month, reaching a ceiling of 17% in March 2005.

“A speedy conference and enactment of this vital legislation are critical and should be a priority of both the Administration and the Congress before the November elections,” stated the letter signed by 412 firms, including multinational giants such as Coca Cola, Exxon Mobil and Time Warner.

Most US producers have reportedly been able to swallow the tariffs in their early stages. However, as the rates rise, many are now beginning to feel the pinch and are finding it increasingly difficult to sell their goods to Europe – America’s largest export market.

“As an exporter of glass products, my company is feeling first-hand the punitive impact of the EU sanctions,” explained Ralph Gerson, Chairman and CEO of Guardian Industries Corporation, a co-signatory of the letter.

“Now is the time for Congress and the White House to put an end to these escalating tariffs and the pain they’re inflicting on many US exporters,” he added.

Agriculture is also beginning to count the cost of the tariffs. Megan Provost, an American Farm Bureau Federation economist estimates the cost of the sanctions to the United States, should they reach the 17% mark, would cause a cumulative loss of $150 million from March 2004 to March 2005.

Whilst the House and the Senate have settled upon their own versions of the new legislation, both of which incorporate a corporate tax cut (among a myriad of other special interest tax cuts), they must still agree a final version before the October recess.

Recommended