The EU has imposed trade sanctions worth 4 bn US
dollars (around 3.2 bn euros) on a range of US products. The
dispute relates to illegal tax breaks benefiting US
The EU has begun levying additional tariffs on a wide range
of US imports as a result of a long-running trade dispute
over illegal US tax breaks. This is the first time in EU-US
trade relations that sanctions have been imposed.
A US practice providing large US
multinationals (including Microsoft and Boeing) with lower
tax rates has been declared illegal by the World Trade
Organisation (WTO). The EU gave 1 March 2004 as a final
deadline for US Congress to change the so-called ‘foreign
sales corporation’ provisions. As a result of inaction by
US law makers, the EU has begun imposing customs duties,
with the approval of the international trade body.
Countermeasures will total 4 billion dollars (around 3.2 bn
euros), approximately equal to the amount of the tax breaks
enjoyed by US corporations. The sanctions will hit goods
such as jewelry, toys, textiles and agricultural
Business communities on either side of
the Atlantic have been apprehensive about the spillover
effects of the sanctions on EU-US trade relations and on
attempts to revive the Doha round of trade talks.