The United States has not decided whether to appeal a new loss at the World Trade Organisation in a long-running dispute with the European Union over tax breaks for Boeing and other US exporters, a top US trade official said on Monday. "We're still looking at it. It just came out on Friday and we're looking at the decision," US Trade Representative Rob Portman said, confirming reports that a confidential preliminary ruling had gone against the United States.
"I was disappointed by it - not terribly surprised, but still disappointed because we tried very hard to comply" with earlier WTO rulings in the case, Portman said. The United States repealed a set of tax breaks, previously known as the Foreign Sales Corporation (FSC) law, last year after the WTO repeatedly ruled they were illegal export subsidies under international trade rules.
Boeing was a beneficiary of the tax break, along with other US exporters like Caterpillar Inc and Microsoft Corp.
The WTO granted the EU the right to slap punitive duties on $4 billion worth of US exports in the dispute.
Brussels began imposing duties in March 2004 with an initial duty of 5 percent on a broad range of products from steel to textiles and raised it to 14 percent by year-end.
The EU lifted the sanctions in January 2005 after Congress passed legislation to comply with the WTO rulings.
However, it warned at the time it could reimpose them on 60 percent of the goods if the WTO declared that the United States was still in breach of its obligations.
Brussels challenged two provisions of the new US law. One provided two years of transitional relief for companies that had previously benefited from the tax break.
The other allowed exporters that had signed a binding contract before September 17, 2003 to continue to receive the tax break for the life of the contract.
Portman said the decision whether to appeal the latest WTO ruling would be made by members of Congress, who would have to approve any further changes to US tax law.
"The administration will be analysing it this week ... and providing our best legal counsel on it as to what the impact might be," Portman said.
He noted the EU's ability to retaliate would diminish over time as the transitional period expires.
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