Bush Repeals U.S. Export Tax Breaks

By Agence France-Presse U.S. President George W. Bush signed a law Oct. 22 repealing an export tax break for U.S. corporations, ruled illegal by the World Trade Organization more than a year ago, his spokesman said. The bill, which should bring an end to European Union trade sanctions, replaced the $5 billion tax breaks with a slew of new lucrative credits for corporate America. The new law would dole out nearly $140 billion in business breaks over a decade. The "American Jobs Creation Act of 2004" repeals the hotly disputed tax break for U.S. exporters with tax relief for domestic manufacturers and other businesses, including energy tax credits. "This legislation will end the European sanctions on American exports, and it will help promote the competitiveness of American manufacturers and other job creators, and help create jobs here in America," the Bush spokesman said. The WTO ruled Jan. 14, 2003, that the Foreign Sales Corporation program was an illegal subsidy that flouts global trade rules by allowing U.S. firms, operating through subsidiaries in offshore tax havens, to benefit from reduced export taxes. It was the latest move in a six-year dispute between the EU and the United States over the question of tax breaks for U.S. companies with foreign operations such as Microsoft, IBM, Boeing and Caterpillar. In March, after efforts to solve the dispute proved unsuccessful, the EU slapped an additional 5% tariff on several U.S. exports, including meat, nuclear reactor parts, toys and wood products. The punitive tariffs have been ratcheted up by one percentage point a month. If continued until the end of the year, the duties would amount to more than $300 million, well short of the $4 billion in countermeasures the WTO had allowed. EU officials have said they would lift the punitive tariffs as soon as Washington complies with WTO rules. Copyright Agence France-Presse, 2004