WASHINGTON, Sept. 30 (UPI) -- A panel report by the World Trade Organization said the United States failed to comply with an earlier decision to condemn tax breaks from U.S. firms overseas.
The WTO compliance panel upheld a previous decision from January 2002, when the WTO ruled the Foreign Sales Corporation law breached global trade rules by providing illegal subsidies to some U.S. businesses.
While the United States repealed the FSC law, the panel found transitional provisions under the 2004 American Jobs Creation Act, passed by Congress last October, were not compliant with its previous ruling in 2002.
Washington has since repealed the FSC law, but the WTO panel concluded transitional provisions under the 2004 American Jobs Creation Act were not compliant with the previous ruling.
"We conclude that, to the extent that the United States, by enacting Section 101 of the Jobs Act...it continues to fail to implement fully the operative DSB (Dispute Settlement Body) recommendations and rulings to withdraw prohibited subsidies and to bring its measures into conformity with its obligations under the relevant covered agreements," the WTO panel report concluded.
The European Union, which lodged the complaint against the United States, welcomed the WTO decision.
"It has confirmed that the U.S. has yet to comply with previous WTO rulings," said Peter Mandelson, EU Trade Commissioner. "These provisions, which are now contained in the American Jobs Creation Act, are unacceptable in view of the large benefits involved."
The EU estimates that U.S. aircraft manufacturer Boeing Co. received up to $750 million in subsidies as a result of the U.S. law.
The United States has yet to make a decision on whether or not it will appeal the decision, according to Neena Moorjani, spokeswoman for U.S. Trade Representative Rob Portman.
"It's premature to say. We are still in the process of studying the report. As always, we will consult with Congress before making any decisions in this regard," said Moorjani.
Under WTO rules, the EU can propose that the report be implemented between 20 and 60 days from the date of the decision. Once the EU makes a proposal a deadline would be established for the appeal.
