EU agrees hit-list in US tax breaks row

The EU yesterday moved a step closer to imposing $4 billion (€3.6 billion) of sanctions in a long-running trade dispute over US corporate tax breaks, after EU member-states gave their blessing to a list of US products that would be subjected to punitive import duties.

The list will be sent to the World Trade Organisation in Geneva for approval early next month and the European Commission expects approval shortly thereafter. This would allow member-states to activate the sanctions at any time.

The move comes at a tense time as trade diplomats seek to prevent a growing number of bilateral disputes from escalating into a full-blown trade war. They include a US threat to challenge the EU's restrictive regime on genetically modified crops and Brussels' insistence that the US end its support for steel manufacturers. Brussels and Washington also need to overcome deep divisions in the current Doha round of trade talks, where the US is among the most vocal critics of the EU's €42 billion system of farm support.

But EU Trade Commissioner Mr Pascal Lamy has signalled this week that the EU would stick to its wait-and-see approach in the tax breaks case.

- (Financial Times Service)