(March 26) The clock is ticking and the meter is running on U.S. exporters, but Congress continues to struggle to repeal an export tax subsidy the World Trade Organization has ruled illegal.

On March 24, Senate Majority Leader Bill Frist, R-Tenn., pulled the bill that would repeal the Foreign Sales Corp./Extra Territorial Income tax benefit from the Senate floor after failing to secure the 60 votes needed to end debate and limit amendments. Democrats had sought assurances they would get a vote on a controversial over-time pay amendment for white-collar workers and other amendments.

The European Union already saddled a wide variety of U.S. exports, including horticultural products, with a 5% tariff as a countermeasure to U.S. failure to repeal the FSC/ETI law.


That tariff will increase 1% each month that Congress fails to act — potentially rising to a cap of 17% next March.

The extra tariff is targeted at a variety of fresh produce, including cherries, asparagus, plums, onions, peaches, celery, navel oranges, avocados, peppers, sweet corn and lemons. The tariff also hits dried fruit, juices and cash-ews.

The market share of those U.S. items in Europe is fairly small — typically 1% to 2% of imported value.

However, sweet corn from the U.S. accounted for 10% of European Union import value of that commodity in 2002, and fresh asparagus from the U.S. accounted for 3.5% of European import value for that item.

California tree fruits also are important exports to Europe and will suffer from the tariff once their season be-gins.

Congress doesn’t seem close to resolving the issue.


One Wash-ington lobbyist, speaking on condition of anonymity, said big corporations such as Microsoft, John Deere and Caterpillar are dragging their feet in supporting a repeal of the FSC/ETI because they continue to reap benefits from the law.

“Every day they can ship and get paid is to their advantage. They can stretch this out another year,” he said.

The irony is that many of the farmers who use John Deere tractors are paying the price for inaction by Con-gress, he said.

The House also is bogged down in trying to repeal the export subsidy. House Ways and Means Committee Chairman Bill Thomas, R-Calif., suggested March 23 it may be next year before Congress can pass the measure.

Thomas said repeal of the export tax subsidy was one of the top priorities for the U.S. and chided the business community for blocking it.