US Tax Act Unlikely To Trigger Immediate Lifting Of EU Tariffs

by Ulrika Lomas, Tax-News.com, Brussels

15 October 2004

The European Union’s Trade Commissioner, Pascal Lamy, has indicated that new legislation passed earlier this week by the US Congress in a bid to comply with a World Trade Organisation ruling is unlikely to result in an immediate lifting of EU trade tariffs on US goods.

Whilst welcoming the final passage of the American Jobs Creation Act 2004, Lamy stated that time will be needed for EU officials to thoroughly examine the provisions of the bill and ascertain whether it meets with the Commission’s requirements before the sanctions can be lifted.

“I am pleased that Congress has finally taken this step towards US compliance with the WTO ruling. It vindicates the EU’s patient but firm approach,” Mr Lamy commented.

He added: “We will now carefully study the details in the final compromise between both chambers, in particular regarding transition periods, grandfathering clauses, as well as all other relevant fiscal provisions.”

However, subsequent reports show that a brewing transatlantic rift over government support for the main American and European aircraft manufacturers, namely Boeing in the US and Airbus in the EU, may complicate the matter.

“There are a number of issues which are not that clear, for instance on the treatment of options for selling planes. Depending on our findings and the fact that the Boeing issue has surfaced, we will need to see what to do,” noted Lamy, according to the Financial Times.

The Trade Commissioner also sought to play down speculation that Boeing’s complaint against subsidies given to Airbus will be escalated under a John Kerry administration.

“Whether this will change with a Kerry administration, I don't think so,” he surmised.

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