WASHINGTON (IslamOnline) - The European Union is seeking a record high $4 billion in sanctions against the U.S. for approving legislation providing tax breaks for giant American exporters.
The E.U. asked the World Trade Organization (WTO) last Friday to impose sanctions on the U.S. because the American government was giving tax breaks to companies that included Boeing, Microsoft and Monsanto.
Last February, a WTO panel ruled that the tax breaks were illegal export subsidies barred by global free trade rules.
The U.S. legislation, which was signed by President Clinton on Thursday and approved by Congress, is regarded as a threatening measure to European industries in the chemical, pharmaceutical, mechanical machinery, and transport equipment fields.
The European Union noted that the new legislation “continues to provide a significant illegal export subsidy to more than half of total U.S. exports, to the direct detriment of European companies.”
The new legislation, labeled illegal by the WTO, altered an earlier system. U.S. representatives in the international organization said the new system would allow American corporations to receive the tax breaks directly and not through offshore subsidiaries.
The European Union trade envoy has asked the WTO to hold a special meeting on November 28 to approve the Union's sanctions request.
Because of complicated and lengthy ruling procedures, any punitive measures, if the U.S. is to be found in violation following an appeal, would probably not be implemented until late next year.
It is doubtful that the $4 billion sought would be the number ultimately imposed by the WTO as a penalty, opting to reduce to one tenth the E.U.’s asking penalty.
