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| EU proposes end to trade dispute with U.S. |
The European Union decided Monday to lift heavy punitive tariffs on U.S. goods - for now - while asking the World Trade Organization to examine possible loopholes in Washington's repeal of illegal corporate tax breaks.
EU Trade Commissioner Pascal Lamy warned that sanctions - which add up to more than $300 million in 2004 - could potentially return next year if the WTO confirms EU "doubts" about the law signed Friday by U.S. President George W. Bush.
Lamy said"
Legally speaking, we will suspend the sanctions and we will keep our options open". Lamy, however, said he would ask the WTO for another ruling on whether the new U.S. law fully complies with global trade rules, a process that normally takes 90 days. |
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| a two-decade fight |
Prolonging the two-decade fight are EU concerns that the new law could allow big exporters like Boeing Co. - already a sore point in trans-Atlantic relations because of a new dispute over alleged unfair subsidies to it and rival Airbus SAS - to benefit from the breaks beyond the two-year transition period.
Lamy said he informally agreed to the transition period provided that all tax advantages from the old law ended on Dec. 31, 2006. But he said he had "doubts" about "grandfather clauses" added late in the process that would allow benefits to continue for contracts involving purchase options that can be exercised after the deadline. |
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| EU sanctions could potentially return |
| The EU sanctions could potentially return if the U.S. law is judged to be not in compliance with the WTO ruling - as happened to the first reform passed by the U.S. Congress in 2000. |
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While the WTO ruling in 2002 allowed the EU to impose penalties totaling a whopping $4 billion - the biggest ever - the new challenge would be on a "much, much smaller" order of magnitude, Lamy said.
Precise figures would have to be determined in Geneva once it is determined how many such contracts there are, he said.
EU ministers have to approve Lamy's proposal to suspend the sanctions, a formality expected to be done in the coming weeks. The sanctions would be lifted effective Jan. 1, the date the U.S. law comes into effect, Lamy said. |
| The U.S. complaint will be discussed Nov. 4 and the EU countersuit on Nov. 5, officials said: Both sides accuse the other of violating WTO rules by giving their civilian aircraft maker billions in direct or indirect support. Last year, Airbus overtook Boeing as the world's largest supplier of commercial airliners. |
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