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The European Union (EU) on Monday called on the United States to end its tax subsidies which was ruled by the World Trade Organization (WTO) as illegal.
Earlier on Monday, the WTO Appellate Body backed EU condemnation of U.S. federal tax subsidies for exporters in the so-called FSC (Foreign Service Corporation) dispute.
Under the WTO rules, the U.S. has 60 days to bring its legislation into line with its WTO obligations once the Appellate Body report is adopted in thirty days time.
After that time EU retaliatory measures will be re-imposed, unless the U.S. has complied in the meantime, according to the EU executive European Commission.
"The responsibility now lies squarely with the U.S., I stand ready to work closely with the U.S. toward finding a solution to this dispute," EU Trade Commissioner Peter Mandelson said in a statement.
"But the EU will not accept a system of tax benefits which give U.S. exporters including Boeing an unfair advantage against their European competitors," he noted.
At stake in the eight-year-old spat are annual tax breaks worth billions of dollars to companies including Microsoft Corp., the world's largest software maker and Boeing, the main beneficiary of the subsidies.
In March 2004, the EU retaliated against U.S. goods ranging from paper and wood to jewelry and clothing with an extra five percent duty. Nine month later, the 25-nation bloc suspended the penalties.
VietNamNet/Xinhuanet
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