Europeans threaten sanctions against US

The EU's top trade negotiator said Monday the US must bring its laws into compliance with global trade rules soon to avoid sanctions of up to US$4 billion against American exports.

EU Trade Commissioner Pascal Lamy met Monday with US Trade Representative Robert Zoellick and was to meet over the next two days with top members of Congress to assess how quickly Congress will be able to comply with a WTO ruling that a tax benefit provided American exporters amounts to an unfair trade subsidy.

Last week, the EU put out a revised list of American products that could be subject to punitive tariffs of 100 percent that would be designed to eliminate up to US$4 billion in American export sales annually.

The EU tariffs have been cleared by the WTO as acceptable retaliation for US tax rules covering foreign sales corporations that the WTO ruled illegally subsidizes US traders.

"Thus far Europe has held off on retaliation," Lamy wrote Monday in a guest column in the Wall Street Journal. "But without concrete steps toward compliance, that is not a situation which can be maintained for much longer."

Asked he had set deadlines during his meeting with Zoellick for sanctions to be imposed, Lamy said that he would do that only when "I am sure it will be helpful."

Lamy he understood it is up to Congress to pass legislation to overhaul the export tax break to bring it into compliance with WTO rules. Advocates for changing the law have used the EU's sanction threat as an argument for why Congress must move quickly.

The commissioner said one problem was a growing list of US trade policies that have been found by WTO hearing panels to violate WTO trade rules. These include the so-called ``Byrd amendment'' that lets the US government fine foreign companies it judges to be dumping goods in this country and donate the fines to American competitors of the foreign firms; and to a WTO ruling that the US was in violation of international copyright protections in a case brought by the Irish Music Rights Organization.

"This is not a question of being un-nice or banging on doors that we should not be banging on," Lamy told reporters. "It is just that we care about the system" of regulated global trade.

Lamy to meet with Senate Finance Committee Chairman Charles Grassley and House Ways and Means Committee Chairman Bill Thomas. Both chairmen support revamping the trade subsidy law to make it comply with WTO rules and regulations.