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(2004/C 65 E/020)

WRITTEN QUESTION P-0025/03

by Dirk Sterckx (ELDR) to the Commission

(13 January 2003)

Subject:   List of products for which countermeasures can be taken in the context of the American Foreign Sales Corporation

On 13 September 2003 the Commission published a draft list of products for which countermeasures could be taken as a reaction against fiscal treatment by the United States under the Foreign Sales Corporation law. A number of importers of American products who are on the list are dissatisfied with this measure. Is there not a risk that this measure could do serious damage to certain European companies? Does the Commission already have an idea of the reaction of those concerned? Will the Commission change the list to take account of the reactions of those concerned? When will the Commission reach a final decision?

Answer given by Mr Lamy on behalf of the Commission

(7 February 2003)

The Honourable Member raises the concern of Community importers on the negative effect that any eventual imposition of sanctions on American products would have on their business.

In that respect, it would be useful to recall the circumstances relating to the World Trade Organisation (WTO) incompatible Foreign Sales Corporation/Extraterritorial Income (FSC/ETI) legislation which provides an illegal export tax subsidy to American firms to the tune of roughly USD 4 000 million per year. In particular, following the Community's successful challenge of the FSC/ETI legislation before the WTO, on 30 August 2002 the Community was granted by the WTO the right to impose countermeasures in the form of tariffs on imports of certain goods from the United States up to that amount. However, the United States has not yet taken concrete steps towards compliance, although both the Administration and senior members of Congress have indicated that this is their intention.

At the same time it must be made clear that the Commission's objective in this dispute is not the imposition of countermeasures on American products but to obtain the withdrawal of illegal measures that adversely affect the interests of Community companies. The Commission's aim is, therefore, to ensure that the United States complies with the WTO ruling on FSC within the shortest time possible. But if the United States fails to comply, the Community will have no other option than to exercise its WTO rights.

In an attempt, however, to minimise the negative consequences that any eventual countermeasures could create for European industry, the Commission has launched a public consultation exercise by selecting only products for which imports from the United States represent a maximum 20 % of total imports into the Community. The Commission is, therefore, now in the process of evaluating comments received from interested parties during the public consultation period. In carrying out this analysis, the Commission will be particularly vigilant to ensure that no harm is caused to Community interests which is after all the stated objective of the whole exercise. A final decision on this will be taken following consultation of the Member States during the first quarter of 2003. At this stage, however, no comments can be made with respect to the inclusion or exclusion from an eventual list of sanctions of particular products.

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