Brussels, Nov 06: The European Commission on Wednesday armed itself with sanctions in a long-running trade dispute with the United States , but backed a soft approach to imposing penalties on up to $4bn of goods. The EU executive approved a proposal to launch sanctions gradually from March ’04, with an introductory tariff of 5%, or $200m. This is to increase one per cent a month for a year, by which time the EU hopes Washington will have repealed the tax laws which sparked the sanctions. “The Commission hopes to pass a very clear message to the United States that their continued failure to implement three years after the expiry of the original WTO deadline is unacceptable,” Trade Commissioner Pascal Lamy said in a statement.
The Commission is eyeing sanctions on another $2.2bn of US goods in December in a separate dispute over steel import tariffs imposed by President Bush.
During a visit to Washington on Tuesday, Lamy had urged the US Congress to get on with repealing the export tax breaks, known as the Foreign Sales Corporation, to avoid the sanctions being imposed.
“The feeling I got (from lawmakers) was it can be done,” Lamy told reporters Tuesday. “Well, the message is ‘Do it’.”
The World Trade Organisation gave the EU the right to impose 100% tariffs on more than $4bn of US exports if Congress does not repeal the tax breaks for exporters. Bureau Report