The World Trade Organisation today gave the EU a green light to consider sanctions worth a record $4 billion against the US until Washington lifts tax breaks for major exporters.
The panel of WTO arbitrators largely ruled in line with the EU's assessment of the amount of retaliation it could take against US imports every year until the subsidy for foreign service corporations (FSC) is eliminated.
They allowed $4.043 billion (€4.122 billion ) as "appropriate countermeasures", basing the amount on the total trade impact of Washington's policy, and rejected a US suggestion of $1.110 billion.
After a bitter dispute between the two trading giants, the WTO confirmed in February that the FSC system is illegal because it provides a direct export subsidy for major US corporations.
The US said it was disappointed by today's evaluation and insisted that the US Congress was examining changes in legislation.
"I am disappointed that the arbitrator did not accept the lower figure put forward by the US," US Trade Representative Mr Robert Zoellick said in a statement.
But EU Trade Commissioner Mr Pascal Lamy said the approved level of sanctions would create "a major incentive" for the US to eliminate the subsidy.
"We are satisfied by today's decision that makes the cost of non-compliance with WTO crystal clear," he said.
AFP