WTO May Allow Sanctions on U.S. Firms

The World Trade Organization is likely to rule today that a U.S. tax break violates global export-subsidy rules, exposing U.S. companies to threatened European Union sanctions of more than $4 billion.

The EU wants permission to impose the trade tariffs if the WTO rejects a U.S. appeal of an earlier ruling, in a case that affects exporters from Boeing Co. and Microsoft Corp. to Eastman Kodak Co., Archer Daniels Midland Co. and General Electric Co.

The potential damages are the highest in the seven-year history of the world trade arbiter. A WTO dispute panel found last August that even after an overhaul, a U.S. law that allows companies to shield income from taxes on a range of sales is an illegal export subsidy to hundreds of companies.

If the appeal goes against the U.S., as many corporate lobbyists and U.S. legislators expect, the WTO would decide around the end of March the size of sanctions the EU could apply. Sanctions approved by the WTO usually are imposed in the form of increased import tariffs on a range of products.