Yet again! FSC's...........

["Lisa & Ian Murray" <seamus@xxxxxxxxxxxxx>]

full article at
http://dailynews.yahoo.com/h/nm/20001115/ts/economy_eu_congress_dc_2.html

Wednesday November 15 1:42 AM ET
U.S. Congress OKs Bill to Avert Trade War with EU

By Adam Entous

WASHINGTON (Reuters) - The House gave final congressional approval Tuesday
to legislation aimed at averting, at least temporarily, billions of dollars
in sanctions against U.S. goods in a heated dispute with Europe over tax
breaks for American exporters.

After months of delay, the House voted 316-72 in favor of White House-backed
legislation repealing the Foreign Sales Corp. (FSC) program, which doles out
tax breaks to exporters through offshore subsidiaries, and replacing it with
a new tax-relief system for U.S. companies.

The legislation has already won Senate backing and White House officials
said President Clinton (news - web sites) would sign it into law before
Friday, the deadline set by the European Union (news - web sites).

The EU will still seek World Trade Organization (news - web sites) (WTO)
permission to impose sanctions on U.S. exports, but U.S. and EU officials
stressed that the sanctions would only take effect if the WTO strikes down
the new legislation at the end of a review process that could drag on until
mid-2001.

Deputy U.S. Treasury Secretary Stuart Eizenstat played down the EU sanctions
list, calling it a ``technical step'' and predicting that it would have no
``disruptive impact'' on transatlantic trade flows.

Eizenstat said he spoke directly to EU Trade Commissioner Pascal Lamy
minutes after the House vote and was assured that the sanctions list would
be ``general rather than specific'' and would not target specific U.S.
industry sectors.

The Geneva-based WTO ruled last February that the FSC program was an illegal
export subsidy, handing the EU a major trade victory, and told Washington to
repeal it by Oct. 1.

The United States missed that deadline, as well as a second Nov. 1 cutoff.
The EU then announced a final deadline of Nov. 17 for Congress and the
president to enact the legislation, setting off a flurry of activity on
Capitol Hill culminating in Tuesday's final passage.

Republican leaders had initially included the FSC overhaul in their $240
billion tax-cut package. But under pressure from big business and key
lawmakers, they agreed to move the FSC separately. The larger tax-cut
package appears to be doomed for the year.

``Mother Of All Trade Wars'' Averted

During the brief House debate, Ways and Means Committee Chairman Bill Archer
appealed to lawmakers to repeal the FSC, saying the dispute could spark the
``mother of all trade wars.''

``It is critical for continued U.S. competitiveness in the global
marketplace. It is critical for our nation's economic security. And most
important, it is critical to preserve as many as 5 million jobs for American
workers and their families,'' said Archer, a Texas Republican.

Eizenstat said the United States narrowly ``avoided a train wreck'' between
the world's largest trading powers.

The legislation, which won Senate approval by voice vote on Nov. 1, repeals
the FSC program and replaces it with a new system offering up to $6 billion
a year in tax breaks to big exporters such as Boeing Co. (NYSE:BA - news)
and Microsoft Corp. (NasdaqNM:MSFT - news), among others.