EU withdraws tit-for-tat sanctions on US after FSC repeal

The European Commission (EC) on Friday announced that it had decided not to impose trade sanctions worth up to $330 million on US goods after the US Congress repealed a tax break bill known as the Foreign Sales Corporation (FSC) tax. The EC said the European Union “warmly welcomed” the repeal of the bill which Brussels has long claimed that the bill gave US exporters an unfair competitive advantage over European firms. A spokesman from the EC stated that since the FSC bill had been repealed, the EU, which had been authorized by the WTO to slap retaliatory measures against US exports if the tax benefits were not lifted, would now abandon plans to impose sanctions on US goods on May 16. As previously reported by SteelOrbis, penalty tariffs on many US goods, including steel products, had started with 5 percent in March 2004 and increased by 1 percent each month until the EC suspended the sanctions in January 2005, for Congress review of the legislation.