Brussels / Washington, 15/11/2000 (Agence Europe) - "Whatever happens", on Friday the European Commission will lodge its request in Geneva aimed at authorising it, if need be, to impose unprecedented trade sanctions against the United States in the so-called "Foreign Sales Corporations" affair. "It is to preserve our rights of retaliation should the reform just adopted by Congress be declared incompatible with the rules of the World Trade Organisation by a later panel", said the spokesperson on Wednesday.
Indeed, the Union has a deadline of 20 days from 1 November (deadline of the period of grace granted to the American decision-making bodies to adopt an new tax exoneration scheme), if it wants to preserve its rights of retaliation in case of disagreement with Washington on the corrections made to the FSC in response to the WTO's condemnation of the system. It will ask the Dispute Settlement Body to allow it to slap sanctions on the United States of several billion dollars should the new mechanism also be disapproved of in Geneva. As - it has stressed on several occasions (see, notably, EUROPE of 2-3 October, pp.8-9) - the Union is convinced that the successor scheme to the FSC remains incompatible with the conclusions of the WTO. A second request should thus follow, with less urgency, in view of reactivating the initial panel (the one that established the illegality of the FSC) so that this time it should decide on the issue of the conformity of the American response. Should the special group agree with the Americans, the affair would be definitively classified; but if not, the Union would already have anticipated what is being qualified on the other side of the Atlantic as "the mother of all trade wars".
It is in these almost apocalyptic terms that the Chairman of the "Ways and Means" Committee in Congress, Bill Archer, successfully pressed the House of Representatives into repealing the FSC and finalising approval of the new regime, as soon as its work resumed, this Tuesday, after the electoral break.. The same day and with over two months delay in relation to the initial deadline granted in Geneva, the deputies adopted by 316 to 72 the revision recommended by the White House. President Clinton has still to sign the document - which will be done before Friday - so as to complete the legislative procedure.
Several billions are already said to be at stake in this affair. Indeed, according to the evaluation made last year in Brussels, the tax exoneration scheme that the United States has reserved for sales companies abroad (the famous Foreign Sales Corporations) since 1984 has led to a tax "relief" in the order of 4 billion dollars a year for the leaders of American industry, such as Microsoft, Boeing, General Electric, Motorola and Caterpillar, through front companies established in the Virgin Islands, Barbados, Guam and other tax havens. These same sources had estimated that an additional 4 billion dollars in exports could be directly and exclusively imputed to this system, of which a "large part" has been snatched from European competition. This "large part" represents the injury that the Union is invoking in this affair and of which the Commission still jealously guards the secret. The figure should be revealed in Geneva on Friday; it may obviously be disputed by the United States at a later stage (which would enable it to gain if only a little time on the sanctions that are looming).