The European Union has given the United States until the end of this year to change laws granting export tax breaks to major U.S. corporations that have been ruled illegal by the World Trade Organization.
In a statement issued Wednesday, EU Trade Commissioner Pascal Lamy says he is counting on the Bush Administration and the U.S. Congress to comply with the WTO ruling by October.
The WTO says the export tax breaks given to such giant U.S. companies as Boeing and Microsoft give them an unfair trade advantage.
The European Union has asked the trade body to approve a list of U.S. products on which it can impose punitive duties if the United States does not change the tax breaks.
The WTO has already authorized the EU to levy sanctions worth $4 billion on U.S. exports to Europe.
Mr. Lamy says the EU will not impose any such punitive duties as long as the U.S. administration and Congress make progress on reforming the system of tax breaks to U.S. companies. But Mr. Lamy also says the EU's patience is not unlimited.
Two bills aimed at bringing the tax breaks into compliance with WTO rules have already been introduced in the U.S. Congress.
Mr. Lamy says he is confident that the United States will come up with a solution that will be fully compatible with WTO rules.
The export tax dispute is only one of several trade spats between the European Union and the United States. Others involve U.S. import duties on foreign steel and an EU moratorium on imports of genetically modified foods produced in the United States.
Just last week, the EU trade commissioner and his American counterpart, Special Trade Representative Robert Zoellick, agreed that they should cooperate more closely to give a new push to now-stalled global trade talks known as the Doha Round.