EU Begins Process to Lift its Additional Duties on Selected U.S. Products Due to FSC/ETI Dispute
The European Commission has drafted a regulation to lift the additional customs duties it has imposed on certain U.S.-origin products in connection with the European Union's (EU's) dispute over the U.S. Foreign Sales Corporation (FSC)/FSC Replacement and Extraterritorial Income Exclusion Act (ETI) tax regime.
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According to EU sources, the draft regulation must now go through the European Council machinery (i.e., member states).
BP is checking on whether the draft regulation proposes an effective date for the EU's lifting of these sanctions, and will update subscribers with this information when available.
(Since March 1, 2004, the EU has imposed additional customs duties on imports of certain U.S. origin products in connection with the FSC/ETI tax regime dispute. As of January 1, 2005, the level of additional duties is 15% and is scheduled to increase another 1% on February 1, 2005.)
On October 25, 2004, the EU Trade Commissioner stated that the European Commission would propose to the European Council the suspension of sanctions currently in place, as from January 1, 2005, the date when the US FSC/ETI repeal bill (the American JOBS Creation Act of 2004, Public Law (P.L.) 108-357) entered into force.
However, the EU Trade Commissioner noted that the EU still has some problems with P.L. 108-357 (e.g., its transitional and grandfathering provisions), and the EU would request World Trade Organization (WTO) dispute settlement consultations as to whether P.L. 108-357 is WTO-compliant.
(See ITT's Online Archives or 01/04/05 news, 05010433, for BP summary of USTR notice requestingpublic comments by January 10, 2005, on the EU's WTO dispute settlement consultations request on P.L. 108-357.)
EU sources note that if there is a persistent problem in 2005 (i.e., if the WTO finds the questionable provisions to be illegal), the EU could reimpose sanctions on the U.S.)