WTO Criticizes US Corporate Welfare Giveaways
People all over the world know that the US federal government is guilty of making huge corporate welfare handouts. You can see that the problem has grown out of hand when even the WTO (World Trade Organization), an agency created by the US to promote its largest corporations in foreign markets -- by coercion! -- criticizes the US corporate welfare scheme.
How did this embarrassing situation occur? You aren't likely to read much about it in any mainstream US media. Here are portions of a recent article appearing in the London Guardian, reporting on the WTO's surprising decision.
$4bn US subsidies incur WTO's wrath
by Charlotte Denny
Transatlantic trade relations take a step closer to full scale war as the World Trade Organisation confirms that a $4bn export subsidy programme for some of America's best known companies violates global trade rules.
A WTO rejection of the US appeal against an earlier judgment in favour of the European Union will pave the way for Brussels to slap up to $4bn in retaliatory sanctions on US goods, a move which Washington has described -- falsely -- as a "nuclear weapon".
The $4bn being sought by Europe would be the largest sanctions bill in the history of the WTO.
Brussels and Washington agreed to observe a ceasefire on several long-running trade disputes last year while they united to back the new round of global trade negotiations successfully launched in Doha in November.
However, today's ruling on the US foreign sales corporations (FSC) laws is likely to reignite festering tensions over issues such as proposed American restrictions on steel imports and the EU's ban on imports of hormone treated beef.
Brussels has called on Washington to amend the rules of the FSC programme which channels tax breaks to big exporters including Boeing and Microsoft.
But with Congress having already rewritten its laws once, only to have the new scheme rejected by the WTO, observers say there is little appetite in Washington for further compromise.
US Against Free Trade
Last August, the WTO ruled that the amended FSC law provided illegal export subsidies, violated the trade body's agriculture agreement and discriminated in favour of American goods.
If as expected, the WTO confirms its earlier judgment, there will be a further two month delay while it decides the size of the sanctions bill the EU can levy. The $4bn being sought, which would be the largest sanctions bill in the history of the WTO, dwarfs earlier rulings in Washington's favour over beef and bananas.
EU officials hope that the US will agree to a voluntary compensation programme rather than forcing it to impose sanctions. Few member states have shown much enthusiasm over drawing up lists of US goods to target, fearing that America could retaliate by putting to test the legality of the EU's own agricultural export subsidy programes at the WTO.
Some member states fear that punitive sanctions on the scale demanded by Brussels could backfire at a time when both Europe and the US are struggling to pull their economies out of recession.
Renewed strain between world's two biggest trading blocs could not come at a worse time for officials at the Geneva-based body who are preparing for the complex negotiations launched at Doha.
The next transatlantic flashpoint is likely to be over steel, where the US is once again on the anti-free trade side. The US has threatened to restrict imports to "protect" its producers from the global supply glut [and to force its own consumers to pay artificially higher prices].
If the US is in favor of free trade, why does it keep trying to tamper with the market and set up special privileges? What should be done? Tell your views to The Progress Report:
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