November 20, 2000

The European Union has asked that the World Trade Organization dispute settlement body consider the EU request for the authority to impose sanctions on U.S. products entering EU member nations. The European Commission reportedly has itemized 46 categories of products of which half are food and agricultural items including livestock, meat and dairy products.

Although the EU requested authority to impose sanctions, "no sanctions, if any, will be imposed until the WTO has had an opportunity to rule on the WTO-consistency of the FSC (Foreign Sales Corporation) replacement legislation" which President signed into law Wednesday, said U.S. Trade Representative Charlene Barshefsky.

Either side may appeal the panel's findings on WTO-consistency to the WTO appellate body. If the FSC replacement legislation is found to be WTO-consistent, that will be the end of the matter, Barshefsky noted. "If the legislation is found to be WTO-inconsistent, the appropriateness of the EU's proposed level of retaliation will be addressed by an arbitration panel. Under WTO dispute settlement procedures, these proceedings will take a minimum of seven months."

She added, "We regret that the EU has not accepted our new legislation. We continue to strongly believe that it is WTO-compliant, as it neither constitutes a subsidy nor is it export-contingent. The EU's view is particularly disappointing given that the legislation represents an extraordinary bipartisan effort whereby the Administration worked with both houses of Congress to draft legislation, under an extraordinarily tight schedule, that complies with the ruling of the WTO Appellate Body. We ask the EU to again consider our new legislation to avoid a confrontation."

American Farm Bureau Federation President Bob Stallman said it was "unfortunate" that the EU "is taking steps that prejudge the United States' compliance on the FCS case. Targeting U.S. agriculture to bear the brunt of Europe's revenge is an outrage. The United States has been an open trading partner with Europe when it comes to agricultural trade."