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US Congress may Break Impasse With EU Over Tax Concession


A senior American trade officials says the U.S. Congress should be able to repeal a tax break for exporters before a European Union deadline, a move that would help prevent a trans-Atlantic trade war.

U.S. Under Secretary of Commerce Grant Aldonas says he thinks Congress is prepared early next year to repeal the Foreign Sales Corporation that gives a tax break to exporters. The law provides large exporters like Boeing or Caterpillar with considerable tax advantages.

The World Trade Organization has ruled the tax break violates trading rules, and authorized the European Union to impose $4 billion in retaliatory tariffs.

Another big trans-Atlantic trade dispute involves tariffs on imported steel, imposed by U.S. President George Bush in March 2002. The WTO has also ruled against this, and the EU responded by threatening to levy more than $2 billion in retaliatory tariffs on American goods.

Mr. Aldonas, speaking to reporters in Brussels, gave no timetable on the steel issue, but said that President Bush has to decide on how far the U.S. steel industry has restructured under the tariff support, and on meeting U.S. obligations under the WTO. While some U.S. steel manufacturers want to keep the tariffs, companies using steel are opposed to them.

Mr. Aldonas has denied that the Bush administration is using trade laws to gain political advantage ahead of next year's presidential elections. He says the trade disputes are costly, citing a dispute over genetically modified organisms that, he says, has cost U.S. producers billions of dollars. He argues that the EU and Washington should cooperate more in their trade relations as an example to other WTO members.

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