U.S., European Union Dispute Export-Subsidy Damage

By John S. McClenahen The dispute between the U.S. and the 15-nation European Union (EU) over income tax relief provided by so-called Foreign Sales Corporations (FSCs) promises to go on for at least a few more months. In a series of rulings, the Geneva-based World Trade Organization (WTO) has upheld the EU's contention that U.S. FSCs are, in effect, an illegal export subsidy. And now the U.S. and the EU are differing over the amount of damages that may be due the Europeans. The EU claims just over $4 billion. But, in a submission to the WTO on Feb. 14, the U.S. Trade Representative's office asserted the damages should be "no more" than $956 million. The U.S. and the EU are scheduled to file rebuttal claims on Feb. 26, and a WTO arbitrator is expected to issue a decision in late April.

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