March 2005

European Union suspends duties on U.S. imports

The world recycling federation BIR informed its members that EU customs duties on imports of certain products (amongst others iron and steel scrap, aluminium scrap, worn clothing and rags) from the U.S. have been suspended as of January 1, 2005, following a Council Regulation adopted on January 31, 2005. Trade sanctions were imposed on the U.S. in reply to a U.S. legislation allowing foreign sales corporations (FSCs) to benefit from export subsidies amounting to more than 4 billion dollars per year since 2000.

The duties will be suspended until January 1, 2006 or 60 days after confirmation by the World Trade Organization that the FSC successor legislation, the American Jobs Creation act, is also not compatible with WTO rules.

The FSCs were ruled against by the World Trade Organization in 2000 as a direct subsidy to exports. In May 2003, the EU was authorized by the WTO Dispute Settlement Body to impose countermeasures of up to a level of 4 billion dollars in the form of additional duties of imports of certain products from the U.S.

The new EU regulation aims at encouraging the U.S. to comply fully with WTO rules and remove the remaining trade distortion created by subsidies granted since the adoption of the FSC Act.

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