EU Wins WTO Backing for Sanctions on U.S.

U.S.-European trade relations appeared headed toward rough waters Monday after a World Trade Organization ruling gave the European Union permission to reimpose sanctions on about $4 billion in U.S. exports.

The WTO’s appellate body, its highest court, again sided with the EU in a long-running dispute over U.S. tax breaks for Boeing Co. and other exporters that have already required the United States to twice rewrite its international tax laws.

The EU’s executive commission said it would reapply a 14% duty on some U.S. exports if the United States did not comply with the new WTO ruling within 90 days.

Affected exports include agricultural goods, textiles, industrial products, electronic products, paper products, jewelry and steel.

“I stand ready to work closely with the U.S. towards finding a solution to this dispute,” EU Trade Commissioner Peter Mandelson said.

“But the EU will not accept a system of tax benefits which gives U.S. exporters including Boeing an unfair advantage against their European competitors. We are seeking nothing more than the reestablishment of a level playing field,” he said.

However, U.S. officials accused Brussels of prolonging the dispute over a relatively small matter. They warned that new sanctions could damage transatlantic trade relations and said the EU seemed to be pursuing the issue because Washington had brought a WTO case against Airbus, Boeing’s chief rival.

“If sanctions are resumed, they’ll only disrupt our bilateral economic relations. I doubt Congress will revisit this legislation,” Senate Finance Committee Chairman Charles E. Grassley, an Iowa Republican whose panel has jurisdiction over tax and trade issues, said in a statement.