|
|
EUROPEAN UNION BEGINS TO ASSESS ADDITIONAL
SPECIAL DUTIES ON
USA EXPORTS TO MEMBER COUNTRIES
History of the FSC case
In subsequent rulings the
WTO found the FSC to constitute an illegal export subsidy under both the
Subsidies Agreement and (in relation to agricultural products) the
Agriculture Agreement and gave the US until 1 November 2000 to withdraw
the FSC scheme.
On 15 November 2000,
President Clinton signed the Extraterritorial Income Exclusion (ETI) Act
into law, which meant to replace the FSC. The ETI Act, however, did not
modify the substance of the export subsidy scheme and as a result the EU
challenged it before the WTO. In January 2002, the WTO confirmed that the
ETI Act also constituted a prohibited export subsidy and that the US had
not, therefore, complied with its previous ruling to withdraw the
prohibited export subsidy.
On 7 May 2003 the WTO
endorsed the EU request for countermeasures for a level roughly equal to
the estimated annual US subsidy (i.e. US $ 4 billion). The EU, however,
avoided any immediate recourse to retaliation so as to give a reasonable
time for the US Administration and Congress to adopt the necessary
legislation for the repeal of ETI.
The deadline for compliance
was set 1 March 2004, as a result of a unanimously approved Council
Regulation 2193/2003 of 8 December, i.e. more than 2 years after the due
date for compliance (January 2002), and 3.5 years beyond the original date
set for US compliance in the FSC case.
EU
countermeasures on US goods
EU's objective remains the
withdrawal of the US illegal subsidy, therefore, the EU has opted for a
response which is measured, gradual and geared towards focusing the mind
of the US legislator to comply.
·
Countermeasures
on the selected products consist of an additional customs duty of 5% to be
enforced as from 1 March 2004, followed by automatic, monthly increases by
1% up to a ceiling of 17% to be reached on 1 March 2005, if compliance has
not happened in-between. Thereafter, the measures should be re-examined in
the light of the then applicable circumstances.
·
In application
of the above, the EU had estimated the amount of the countermeasures at
$315 million in additional customs duties in the period 1 March to 31
December 2004 and at $666 million in additional customs duties for the
period 1 January 2005-31 December 2005. These amounts have been estimated
by applying the above mentioned extra customs duties on the average US
imports during the period 1999-2001.
·
For example, the
monthly impact in 2004 is estimated as follows:
|
2004
|
Additional
duty |
in 000 US $
|
|
March |
5% |
16,575 |
|
April |
6% |
19,890 |
|
May |
7% |
23,206 |
|
June |
8% |
26,521 |
|
July |
9% |
29,836 |
|
August |
10% |
33,151 |
|
September |
11% |
36,466 |
|
October |
12% |
39,781 |
|
November |
13% |
43,096 |
|
December |
14% |
46,411 |
·
Countermeasures
will be applicable throughout the EU (including as of 1 May the ten new
Member States), but they will remain within the authorized level of US $ 4
billion.
How
the list of US goods was prepared
On 30 August 2002, the WTO
arbitrators established that the EU may impose up to US $ 4 billion in
trade retaliation in the FSC/ETI dispute. On 13 Sept. 2002 the European
Commission published a list of products that could be subject to
countermeasures and invited European Industry and Member States to comment
on this list1. These products were selected from the very
general custom chapters which had been notified to the WTO at the time of
the original condemnation of the FSC by the WTO2(November
2000).
In order to minimise the
negative consequences that a possible retaliation could cause to EU
economic operators the European Commission had included in the list
products on which dependency from the US was considered very low i.e. the
list contained:
·
only products
for which imports from the US represented maximum 20 % of total imports
into the EU, and,
·
which were
also exported from the EU.
Following the public
consultation, Member States gave their unanimous support to the final list
in March 2003. The EU notified the final list to the WTO which, on 7 May
2003, endorsed the EU request for countermeasures.
The list covers products
from a great number of sectors such as agriculture (eg hams and cuts, milk
powder, tomatoes, pineapples), textiles (e.g. anoraks, suits, trousers,
bed linen), industrial products (e.g. forks, hand tools, drilling tools),
electronic products (e.g. watertube boilers, steam engines,
refrigerators), paper products and steel (e.g. ferro-nickel alloys,
non-alloy ingots, flat hot rolled products). The above are only general
descriptions; t he exact description of the products under each CN code
can be found at:
http://europa.eu.int/eur-lex
(OJ L290 of 28 October 2002).
The additional duty is to
be added on top of the current customs duty; for example, the customs
duties on specific products such as certain types of honey, oil cakes,
skates and candles will change as follows:
|
CN Code
|
Description
|
Normal rate
of duty |
Additional
duty
March 04
|
Total
applicable duty
March 04
|
|
23040000 |
OIL-CAKE |
0% |
5% |
5,00% |
|
34060019 |
CANDLES. |
0% |
5% |
5,00% |
|
95067030 |
ROLLER SKATES |
2,70% |
5% |
7,70% |
|
4090000 |
NATURAL HONEY |
17,30% |
5% |
22,30% |
1 Notice
Relating to the WTO Dispute Settlement proceeding concerning the US tax
treatment of Foreign Sales Corporations ("FSC") - Invitation for Comments
on the List of Products that could be subject to Countermeasures, OJ C
217/2 of 13 September 2002.
2 United States
– Tax Treatment For "Foreign Sales Corporations", Recourse by the European
Communities to Article 4.10 of the SCM Agreement and Article 22.2 of the
DSU, WT/DS108/13, 17 November 2000.
|
1 Live
animals
0101 90
19
0106 11
00
0106 12
00
0106 19
90
0106 20
00
0106 31
00
0106 32
00
0106 39
90
0106 90
00 |
2 Meat
and edible meat offal
0203 22
11
0203 29
55
0203 29
59
0203 29
90
0204 43
10
0205 00
11
0205 00
19
0208 30
00
0208 40
90
0208 50
00
0208 90
40
0208 90
95
0210 19
81 |
4 Dairy
produce; birds' eggs; natural honey; edible products of animal origin,
not elsewhere specified
or
included
0402 10
19
0402 21
19
0403 10
91
0403 90
91
0404 10
02
0406 10
20
0406 20
90
0406 90
21
0406 90
69
0406 90
81
0406 90
86
0406 90
87
0408 11
80
0408 91
80
0409 00
00
0410 00
00 |
5
Products of animal origin not elsewhere specified or included
0501 00
00
0502 10
00
0502 90
00
0504 00
00
0505 10
10
0505 10
90
0505 90
00
0507 90
00
0508 00
00
0509 00
10
0511 91
10
0511 99
10 |
7 Edible
vegetables and certain roots and tubers
0702 00
00
0703 10
19
0706 10
00
0706 90
90
0708 10
00
0708 20
00
0709 20
00
0709 40
00
0709 59
10
0709 59
90
0709 60
10
0709 60
99
0709 90
60
0709 90
90
0710 21
00
0710 22
00
0710 29
00
0710 80
51
0710 80
59
0710 80
85
0710 80
95
0710 90
00
0711 40
00
0711 59
00
0711 90
80
0712 31
00
0712 32
00
0712 33
00
0712 39
00
0712 90
30
0713 10
90
0713 20
00
0713 31
00
0713 90
90
0714 10
99
|
|
8 Edible
fruit and nuts; peel of citrus fruits or melons
0801 11
00
0801 19
00
0801 21
00
0801 32
00
0803 00
19
0803 00
90
0804 20
90
0804 30
00
0804 40
00
0805 10
30
0805 20
90
0805 50
10
0805 50
90
0805 90
00
0807 19
00
0807 20
00
0809 10
00
0809 20
05
0809 30
10
0809 30
90
0809 40
05
0810 40
30
0811 10
11
0811 10
90
0811 20
31
0811 90
50
0811 90
70
0811 90
80
0812 10
00
0813 10
00
0813 40
95
0813 50
99 |
10
Cereals
1008 10
00 1008 20 00 1008 30 00 |
11
Products of the milling industry; malt; starches; inulin; wheat gluten
1102 30
00
1103 20
40
1106 20
90
1106 30
10
1107 10
99
1108 19
90 |
12 Oil
seeds and oleaginous fruits; misc. grains; seeds and fruit; industrial
or medical plants; straw and fodder
1204 00
90
1205 10
90
1205 90
00
1207 10
90
1207 20
90
1207 40
90
1207 60
90
1207 99
20
1207 99
98
1209 10
00
1209 22
80
1209 23
11
1209 26
00
1209 99
10
1210 10
00
1211 10
00
1211 20
00
1211 30
00
1211 40
00
1211 90
75
1212 20
00
1212 99
80
1213 00
00
1214 10
00
1214 90
91
1214 90
99 |
15
Animal or vegetable fats and oils and their cleavage products;
prepared edible fats; animal or vegetable waxes
1501 00
11
1502 00
90
1504 10
10
1504 10
99
1505 00
10
1505 00
90
1507 10
90
1507 90
90
1508 10
90
1511 10
10
1511 90
99
1512 11
91
1512 19
91
1513 19
30
1513 19
99
1513 29
91
1514 19
90
1514 99
90
1515 30
10
1515 30
90
1515 40
00
1515 50
19
1515 50
99
1515 90
40
1515 90
91
1520 00
00
1521 10
00
1521 90
91
1521 90
99
1522 00
99
|
|
16
Preparations of meat, of fish or of crustaceans, mollusks or other
aquatic invertebrates
1602 31
19
1602 41
10
1603 00
10
1604 14
11
1604 14
16
1604 30
10
1605 20
10
1605 20
91
1605 20
99
1605 40
00
1605 90
30 |
17
Sugars and sugar confectionery
1701 11
90
1701 99
10
1702 20
90
1702 40
10
1702 90
99
1704 10
19
1704 90
65
1704 90
71
1704 90
75
1704 90
81
1704 90
99 |
19
Preparations of cereals, flour, starch or milk; pastry cooks' products
1901 10
00
1901 20
00
1901 90
91
1902 19
10
1902 19
90
1902 20
91
1902 20
99
1902 30
10
1902 30
90
1904 10
10
1904 10
90
1904 20
99
1904 30
00
1904 90
80
1905 10
00
1905 31
11
1905 31
19
1905 31
30
1905 31
91
1905 31
99
1905 32
11
1905 32
19
1905 32
99
1905 90
10
1905 90
20
1905 90
30
1905 90
45 |
20
Preparations of vegetables, fruit, nuts or other parts of plants
2001 10
00
2001 90
70
2001 90
96
2002 10
10
2002 10
90
2003 10
30
2004 10
99
2005 59
00
2005 60
00
2005 70
10
2005 70
90
2005 90
50
2005 90
70
2005 90
80
2006 00
38
2007 99
39
2007 99
58
2007 99
93
2009 31
11
2009 31
19
2009 31
99
2009 39
31
2009 39
39
2009 41
10
2009 41
99
2009 49
30
2009 49
99
2009 71
99
2009 79
19
2009 79
99
2009 80
38
2009 80
71
2009 80
97
|
21
Miscellaneous edible preparations
2101 11
11
2101 11
19
2102 10
90
2102 20
11
2102 30
00
2103 90
10
2104 20
00
2105 00
10
2105 00
91
2106 90
20
2106 90
59 |
|
23
Residues and waste from the food industries; prepared animal fodder
2301 10
00
2301 20
00
2303 10
90
2304 00
00
2305 00
00
2306 10
00
2306 30
00
2306 41
00
2306 49
00
2306 50
00
2306 60
00
2307 00
90
2309 90
41 |
33
Essential oils and resinoids; perfumery, cosmetic or toilet
preparations
3301 23
10 3301 29 31 3307 41 00 |
34 Soap,
organic surface-active agents, washing preparations, lubricating
preparations, artificial waxes, prepared waxes, polishing or scouring
preparations, candles and similar articles, modelling pastes, dental
waxes and dental preparations with a basis of plaster
3401 20
10 3406 00 11 3406 00 19 3406 00 90 |
35
Albuminoidal substances; modified starches; glues; enzymes
3501 10
50 3501 10 90 3501 90 90 3503 00 80 3507 10 00 |
41 Raw
hides and skins (other than fur skins) and leather
4104 41
19
4104 49
19
4105 10
90
4105 30
99
4106 31
10
4106 31
90
4106 32
10
4106 32
90
4107 11
19
4107 11
90
4107 12
19
4107 12
91
4107 19
10
4107 19
90
4107 91
10
4107 91
90
4107 92
10
4107 99
10
4107 99
90
4112 00
00
4113 10
00
4113 20
00
4113 90
00
4114 10
10
4114 10
90
4114 20
00
4115 10
00
4115 20
00
|
|
42
Articles of leather; saddlery and harness; travel goods, handbags and
similar containers; articles of animal gut (other than silkworm gut)
4201 00
00
4202 11
10
4202 11
90
4202 12
91
4202 19
90
4202 21
00
4202 22
10
4202 29
00
4202 31
00
4202 32
10
4202 32
90
4202 91
10
4202 91
80
4202 92
11
4202 92
15
4202 92
91
4202 92
98
4203 10
00
4203 21
00
4203 29
10
4203 29
91
4203 29
99
4203 30
00
4203 40
00
4204 00
10
4205 00
00
4206 10
00
4206 90
00
|
3
Furskins and artificial fur; manufactures thereof
4303 90
00 |
44 Wood
and articles of wood; wood charcoal
4401 10
00
4401 21
00
4401 22
00
4401 30
10
4401 30
90
4402 00
00
4403 10
00
4403 20
31
4403 20
39
4403 20
99
4403 41
00
4403 49
10
4403 49
95
4403 92
10
4403 99
51
4404 20
00
4407 10
15
4407 10
31
4407 10
33
4407 10
38
4407 10
91
4407 24
90
4407 25
60
4407 26
90
4407 29
05
4407 29
69
4407 29
83
4407 29
85
4407 29
95
4407 91
31
4407 92
00
4407 99
30
4407 99
50
4407 99
96
4408 10
15
4408 31
21
4408 31
25
4408 31
30
4408 39
21
4408 39
31
4408 39
35
4408 39
55
4408 39
85
4408 39
954409 10 11
4409 10
18
4409 20
11
4409 20
91
4409 20
98
4410 21
00
4410 29
00
4410 31
00
4410 32
00
4410 33
00
4410 39
00
4411 11
10
4411 19
10
4411 21
10
4411 29
90
4412 22
10
4412 22
91
4412 22
99
4412 23
00
4412 29
20
4412 29
80
4412 92
10
4412 92
91
4412 92
99
4412 99
20
4412 99
80
4414 00
10
4414 00
90
4415 10
90
4415 20
20
4415 20
90
4417 00
00
4418 10
50
4418 10
90
4418 20
10
4418 20
50
4418 20
80
4418 30
10
4418 30
91
4418 30
99
4418 50
00
4418 90
10
4418 90
90
4419 00
90
4420 10
11
4420 90
91
4420 90
99
4421 10
00
4421 90
91
|
48 Paper
and paperboard; articles of paper pulp, of paper or of paperboard
4801 00
00
4802 40
10
4802 40
90
4802 54
90
4802 55
00
4802 61
10
4802 61
90
4802 62
10
4802 62
90
4802 69
10
4803 00
10
4804 11
90
4804 19
11
4804 19
15
4804 19
19
4804 19
31
4804 19
90
4804 21
10
4804 21
90
4804 29
10
4804 29
90
4804 31
59
4804 39
59
4804 39
90
4804 41
10
4805 12
00
4805 19
10
4805 19
90
4805 24
00
4805 25
00
4805 91
10
4805 91
91
4805 92
10
4805 92
91
4805 93
10
4805 93
91
4806 10
00
4806 20
00
4806 40
10
4806 40
90
4808 10
00
4809 20
10
4809 20
90
4809 90
00
4810 13
91
4810 13
99
| |
