Pushing Boundaries
In 2002, the Geneva-based WTO said the U.S. tax scheme provided U.S. exporters with an unfair advantage over their European competitors. The WTO then authorized the EU to retaliate against $4 billion worth of American exports per year until the U.S. complied with the ruling.
However, the matter was considered to be settled in 2006 when U.S. lawmakers repealed the illegal measures and the EU withdrew its retaliatory tariffs against the U.S.
Though the U.S. could challenge the legality of the EU’s move, a final dispute ruling could take several years and the WTO may never fully resolve the matter if the U.S. continues to block nominations to the WTO appellate body beyond Dec. 10.
“Imposing tariff retaliation in this way, based on another case from long ago, pushes the boundaries of what is permissible under WTO rules,” Simon Lester, an associate director at the Washington-based Cato Institute, said in an interview.
--With assistance from Jenny Leonard and Birgit Jennen.
This article was provided by Bloomberg News.