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To: Hawkmoon who wrote (49737)	2/28/2000 7:56:00 AM
From: long-gone	Respond to of 116764

More on the(other) coming trade war: WTO Rejects Tax Appeal Decision Could Cost U.S. Companies More Than $15 Billion By Curt Anderson The Associated Press W A S H I N G T O N, Feb. 24 ? Billions of dollars in tax breaks for U.S. exports have been ruled an illegal subsidy by the World Trade Organization, but the issue is far from settled. The United States believes a WTO panel was wrong in siding with the European Union in the dispute, Rita Hayes, U.S. ambassador to the trade group, said today. ?We will seek a solution that ensures that American firms and workers are not disadvantaged relative to their European counterparts,? Hayes said. U.S. Strongly Disagrees U.S. Trade Representative Charlene Barshefsky confirmed Wednesday that the WTO panel had ruled the tax incentives, known as the Foreign Sales Corporation program, are an illegal subsidy. ?We strongly disagree with the appellate body?s ruling,? Barshefsky said. ?Our view remains that the FSC is completely consistent with U.S.-WTO obligations.? Treasury Secretary Lawrence Summers said the United States will not abandon the program and will pursue negotiations intended to avoid retaliation from the European Union, which brought the WTO challenge. Summers, in an interview Wednesday with The Associated Press, said the Clinton administration is ?clear in our commitment to finding a way to maintain the important incentives for U.S. exports that have been provided in the past. I?m sure we?ll find a way to do that.? The Foreign Sales Corporation program enables U.S. makers of computer software, chemicals, machinery and many other products to shield some export income from taxes. The tax breaks for companies such as Microsoft, Boeing and General Motors would be worth more than $15 billion over the next five years, according to congressional estimates. The European Union puts the five-year price tag at $17.5 billion; the administration estimates $7 billion. The EU trade commissioner, Pascal Lamy, welcomed the ruling. ?The FSC system and its predecessor have had a major negative effect on international trade to the detriment of European companies,? he said in a statement from Brussels. ?Of course we think that WTO members should be free to decide on their own tax systems. But each member must do so fairly and in line with the rules,? Lamy said. Companies Fear Possible Trade War Congressional leaders are urging a negotiated deal, particularly because changes in the law stemming from the WTO decision would be tricky, costly and time-consuming. Also, opponents might seize the opportunity in an election year to attack the program as corporate (cont) abcnews.go.com