This dispute originally was in relation to tax relief plans for Foreign Service Companies (FSC’s) that consist of US companies with overseas branches of major US companies with a global reach, like computer giant Microsoft and aircraft manufacturer Boeing.
In short during 2003 the WTO held hearings on the matter and ruled that the tax breaks were in violation of international trade law. This ruling lead to a hefty 14% tariff on $4 billion worth of US imports ranging from steel and car parts to foodstuffs and textiles.
The EU then raised the sanction in 2004 after congress reportedly removed the illegal tax breaks, but has threatened to reinstate them by May of this year if translational provisions left in by congress were not removed immediately.
The good news is that the US is no longer the biggest kid on the block regarding international trade. The EU and WTO, once mere puppet enforcement organizations for US economic policy are beginning to protest high costs and unfair tax breaks in the US.
Am I the only American feeling a bit behind the ball? Why is the EU standing up for our economic rights and we, the entrepreneurs, of the US are...
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