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EU To Delay Lifting Of Tariffs On US Goods

by Ulrika Lomas,, Brussels

17 December 2004

It has been reported that the European Union may delay its pledge to lift trade tariffs on US goods on January 1 because of lingering doubts over the phasing-out provisions of illegitimate trade subsidies in the recently passed corporate tax bill.

The American Jobs Creation Act, passed by Congress in October, repealed legislation judged illegal by the WTO and was initially welcomed by Brussels, which had imposed retaliatory tariffs in response.

However, Europe remains concerned over the length of the phasing out period for the legislation, and last month called on the WTO to investigate the new bill’s grandfathering provisions for long term contracts signed before the FSC-ETI rules were repealed.

According to the Financial Times, the European Commission has now grown impatient with what it sees as US foot dragging, and has asked the WTO for permission to re-impose more than $300 million in import tariffs on January 1 2006 unless the tax breaks are phased out completely in the meantime.

The European Commission is reportedly unhappy that US aircraft maker Boeing will continue to receive some $150 million in tax breaks over the next two years, although European Trade Commissioner Peter Mandelson has insisted the row has nothing to do with growing transatlantic antagonism between Boeing and Airbus over subsidies.

The tariffs are due to reach 14% next month on some $4 billion worth of goods, ranging from steel to clothing to farm produce.

A comprehensive report in our Intelligence Report series looking at tax effective structures for global manufacturing firms is available in the Lowtax Library at and a description of the report can be seen at

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