News Release
Pascal Lamy
No. 102/04
June 17, 2004
US-FOREIGN SALES CORPORATION (FSC) – EU TRADE COMMISSIONER PASCAL LAMY WELCOMES
US HOUSE OF REPRESENTATIVES VOTE
In a further step towards US compliance in a long-standing trade dispute between
the EU and the US, on Thursday 17 June the US House of Representatives adopted
the Thomas bill repealing the FSC/ETI.
Upon hearing
the news, EU Trade
Commissioner
Pascal Lamy stated, “I have repeatedly stated that our
objective remains the withdrawal of the US illegal subsidy and compliance with
the WTO’s findings. Today, thanks to the efforts of Chairman Thomas and his colleagues
in the House, we are a step closer to this objective. I very much hope that both
the House and Senate can now agree on a final text so that an FSC/ETI repeal bill
is rapidly adopted and signed into law by President Bush.
"It goes without saying that
the moment WTO compliant legislation becomes law, the EU will immediately repeal
the countermeasures. That will be good news for all involved in transatlantic
trade. Let’s hope the time will shortly come to put this long-standing
dispute behind us once and for all.”
Background
In subsequent rulings by a Panel
and the Appellate Body, the WTO found the FSC
to constitute an illegal export subsidy under both the Subsidies Agreement and
(in relation to agricultural products) the Agriculture Agreement. The US was then
given until 1 November 2000 to withdraw the FSC scheme.
On 15 November 2000, President Clinton
signed the Extra Territorial Income Act (ETI) to replace the FSC. The ETI Act,
however, did not modify the substance of the export subsidy scheme and as a result
the EU challenged it before the WTO. In January 2002, the WTO confirmed that the
ETI Act also constituted a prohibited export subsidy and that the US had not,
therefore, complied with its previous ruling.
On 7 May 2003 the WTO endorsed the
EU request for countermeasures for a level roughly equal to the estimated annual
US subsidy, i.e,. US$ 4 billion. The EU had, however, avoided any immediate recourse
to retaliation so as to give a reasonable time for the US Administration and Congress
to adopt the necessary legislation for the repeal of FSC.
On 1 March 2004 the EU imposed
countermeasures consisting of an additional customs duty of 5% on a list of
US products, followed by automatic, monthly increases by 1% up to a ceiling of
17% to be reached on 1 March 2005, if compliance has not happened in the meantime.
On 11 May the US
Senate adopted the JOBS Act, a bill which repeals the FSC/ETI.
In order to become US law, the House-passed
FSC/ETI repeal bill will need to be reconciled with the Senate-passed bill and
signed by the US President.
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Press Contacts:
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Anthony Gooch
202-862-9523
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Maeve O'Beirne
202-862-9549
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