President signs tax measure

Journal Record, The (Oklahoma City), Nov 17, 2000

WASHINGTON (AP) -- President Clinton signed tax legislation Thursday that he said should avert a trade war with the European Union, meeting today's deadline to replace a U.S. export tax system invalidated by the World Trade Organization.

If he had not acted, the EU could have begun imposing retaliatory tariffs on U.S. goods that have been estimated at $4 billion.

Even though EU officials have indicated they still will press for trade penalties, Clinton said the new tax system "will avoid an immediate confrontation" because the WTO must review the U.S. law before authorizing any retaliatory action. The review is likely to take several months.

"We plan to continue working with the EU to manage this difference of views responsibly and to avoid any harm to our strong bilateral relationship," the president said in a written statement released Friday during his trip to Vietnam.

Acting on an EU challenge, the WTO ruled that the Foreign Sales Corporation law amounted to an illegal trade subsidy. The new law, costing $4.5 billion over 10 years above what that law cost, attempts to address the WTO objections while preserving tax breaks used by more than 6,000 U.S. exporting companies.

"I believe this plan will put us into compliance with the World Trade Organization ruling so that we can avoid retaliation even if the EU should challenge the substance of the underlying proposal," said Rep. Bill Archer, R-Texas, chairman of the House Ways and Means Committee.

The United States previously missed Oct. 1 and Nov. 1 deadlines to enact the replacement law.

Europeans agreed to hold off on seeking sanctions because the measure was working its way through Congress. The bill had been part of a larger 10-year, $240 billion tax package still awaiting action on Capitol Hill when lawmakers return in December for a lame-duck session.