(Oct. 13) A top European trade official and a leading U.S. farm advocate expressed satisfaction Oct. 12 that Congress repealed legislation granting export tax breaks — even if it was four years after the World Trade Organization deadline.

“I am pleased that the Congress has finally taken this step towards U.S. compliance with the World Trade Organization ruling. … It vindicates our patient but firm approach,” said European Union Trade Commissioner Pascal Lamy.

He noted the WTO has time and again condemned the Foreign Sales Corp./extraterritorial income program, which the global trade body said provided illegal subsidies to U.S. exporters worth $4 billion a year.

The export tax break, in its original form, allowed exporters — primarily big corporations like Microsoft and Caterpillar but also agricultural marketers — to cut their tax bill on foreign profits by 15% to 30%.

In May 2003, the WTO endorsed the European Union request for a countermeasure.

Still holding off retaliation while Congress considered the issue, the EU waited until March before applying its countermeasure. The EU then placed a 5% tariff on a set of U.S. exports — including some fruits and vegetables.

Rising by 1% each month until the export tax break was repealed, the tariff reached 12% in October and would have topped out at 17% if Congress had not acted.

Bob Stallman, president of the American Farm Bureau Federation, Park Ridge, Ill., said the passage of the legislation stopped EU sanctions that could have cost U.S. agriculture as much as $150 million in lost sales annually.

However, Lamy expressed concern that the repeal will allow some features of the export tax break to be available until the end of 2006.

He did not indicate whether Europe would formally object to the WTO on the issue of transition periods.

The repeal of the U.S. export tax break was part of a huge bill that featured extensive revision of corporate taxes and dozens of other tax breaks for a wide range industries, including agriculture.

Stallman praised the legislation’s incentives for production of ethanol and biodiesel.

The bill provides $143 billion in tax breaks over 10 years, offset by the elimination of some tax loopholes.