WTO Experts to Investigate US-Europe Tax Row

Published December 20th, 2000 - 02:00 GMT

The World Trade Organization accepted Wednesday a request from the European Union for a panel of experts to investigate whether a revised US system that lets US exporters save tax complies with WTO rules, trade sources said. 

The European Community told a meeting of the WTO's dispute settlement body that the new system of so-called foreign sales corporations (FSC) retained elements of the old one, which had already been condemned by the global trade body, they said. 

The EC argues that FSCs -- set up under US tax laws -- enable US exporters to dramatically undercut their European rivals and has put at four billion dollars the yearly amount which it believes it is losing out on because of what it calls illegal subsidies. 

Brussels said in November it was asking the WTO for authorization to impose 4.04 billion dollars in retaliatory sanctions. 

The administration of US President Bill Clinton won approval in Congress also in November for its revised FSC system. 

The US delegation told the meeting here it did not oppose the setting up of the panel, saying it believed its new law would be found to be compatible with WTO agreements. The experts now have 90 days to investigate. 

The United States asked at the end of November for a separate WTO panel of arbitrators to rule on the level of sanctions requested by the European Union, which will not give its findings until the latest panel of experts has done so -- GENEVA (AFP)  



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