these guys have protected their markets with tariffs for years now...now they pull this...here's betting they don't have the guts to see it through. http://www.washingtonpost.com/wp-dyn/articles/A16641-2002Aug30.html GENEVA –– The World Trade Organization said Friday that the European Union can impose $4 billion in sanctions against the United States – a figure 20 times bigger than any sanction allowed in the past – because of tax breaks given to U.S. corporations operating abroad. Delighted by the verdict, the EU vowed to go ahead with plans to impose the sanctions by working on lists of targeted products, including everything from textiles, foodstuffs and automotive parts to nuclear reactors, unless Washington ends the tax policy. "The cost of noncompliance with WTO is crystal clear," said EU Trade Commissioner Pascal Lamy in a statement. "The path is now clear for the EU to adopt sanctions if the United States does not repeal the ... scheme expeditiously." Aside from the rhetoric, however, the amount was so huge – and the stakes for U.S.-American trade relations so high – that there seemed little chance of Brussels actually implementing its threat. Instead, experts said that the EU would likely use the figure as a yard stick in bargaining to force Washington to amend its law quickly. Kimberly Pinter, director of corporate finance and tax for the Washington-based National Association of Manufacturers, said the EU may have been given too much to use. "They're like the little dog that caught the bus," she said. "They've gotten something larger than they can use." As for any change to the U.S. law, a repeal would happen if an "adequate replacement" was on hand, she said. The "foreign sales corporations" system lets companies with a foreign presence, such as Boeing Co. and Microsoft Corp., to exempt between 15 percent and 30 percent of their export income from U.S. taxes. By doing that, the price of their goods are lowered and more competitive than foreign rivals. Last year, the WTO ruled that it constituted an illegal subsidy. The tax break, coupled with a second benefit not challenged by the EU, is expected to save U.S. companies an estimated $4.8 billion this year. A WTO arbitrator ruled that the European Union was entitled to impose as much as $4 billion a year in trade sanctions to make up for European business lost because of the U.S. law. Washington had claimed the figure should be less than $1 billion. U.S. Trade Representative Robert Zoellick said he was disappointed, but confident that the sanctions would never be put in place because Congress is considering legislation that would change its tax regime while at the same time improving the competitiveness of U.S. companies in overseas markets. "One of the ironies of this case is that when the dust has settled, we hope to find that the competitiveness of U.S. firms has been strengthened, rather than diminished," Zoellick said. WTO Director-General Mike Moore – who leaves office this week after three years – issued a statement calling on both sides to try to resolve the dispute "in an amicable and constructive fashion." "The European Union and the United States are among the most important members of this organization and both hold a special responsibility to ensure the continued health and soundness of the WTO and global trading system," Moore said. Lamy said the EU would start consultations with member nations and industry groups on which products should be hit with the sanctions – which come in the form of import tariff hikes that effectively price the U.S. products out of the European market. The ruling had been postponed several times since April, officially because of problems with the translation of documents and the complexity of determining an exact figure for fines. But both sides have been happy with the delays, not wanting to inflame trans-Atlantic trade tensions. The United States and EU also have been trying to defuse a battle over steel tariffs. In the past, the United States has imposed WTO-approved trade sanctions on the European Union, including in disputes over banana imports and hormone-treated beef, but the sums of money involved were much smaller
What EU company competes with Microsoft??? And I have no idea how they can complain about Boeing when Airbus is a freakin joint effort from multiple EU countries. Talk about unfair competition...
From the CNN version of the story (full version at: http://money.cnn.com/2002/08/30/news/international/wto_tax.ap/index.htm) excerpts: <I>The result is a big victory for the EU, which had requested the $4 billion amount. The United States claimed the award should be less than $1 billion. ... The tax break, coupled with a second benefit not challenged by the EU, is expected to save U.S. companies an estimated $4.8 billion this year. The United States accepted that it was violating WTO rules but said the penalty should be below $1 billion. </I> I don't see the problem here. The US knowingly tried to get around WTO rules (this was a replacement law of another law that violated WTO rules), and ended up earning our companies $4.8 billion extra from it.
Major --- it's just another pot/kettle situation is all...but it's amplified here because of the penalty...no penalty has even come close to approaching this amount, from what i understand. And just because you're right, doesn't mean it's always worth enforcing that fact...
My question wasn't 'are there software makers in Europe.' My question was 'what EU company competes with Microsoft.' Slightly relevant since if there's not a direct competitor there is no 'unfair advantage.' All software companies do not compete with each other just because they make 'software,' in case you didn't know that.
but it's amplified here because of the penalty...no penalty has even come close to approaching this amount, from what i understand. Agreed, but no law has screwed European companies out that much money before either. Basically, what happened is akin to a government subsidy. US Govt paid $4B so their companies can make $4.8B. It would be like catching someone who stole a million dollars and having the penalty be that someone else has to pay a $500,000 fine. My question wasn't 'are there software makers in Europe.' My question was 'what EU company competes with Microsoft.' Slightly relevant since if there's not a direct competitor there is no 'unfair advantage.' All software companies do not compete with each other just because they make 'software,' in case you didn't know that. Since Microsoft makes software in virtuallly every single software segment (games, office, system, web, etc), the majority of software companies are going to compete with them in some way or another.
Actually, no. There are a lot of spaces in which Microsoft does not compete. That is why they have alliances and why they look for companies that make complimentary products. If they competed in every space there would be no reason to do that except with VARs for companies with worth under $100 million, where the profit margins do not give a sufficient return on investment.
Actually, no. There are a lot of spaces in which Microsoft does not compete. That is why they have alliances and why they look for companies that make complimentary products. If they competed in every space there would be no reason to do that except with VARs for companies with worth under $100 million, where the profit margins do not give a sufficient return on investment. Would you have preferred if I had said every "major" market segment? Do you actually believe there are no companies in Europe that design games, operating systems, web browsers, spreadsheet or word processing software?
That would have been incorrect. For instance, there are many areas of enterprise software ('major market segments') that Microsoft does not compete in. Consider an enterprise software deal can go from $150,000 to $20,000,000, as compared to a copy of Windows at $49.99. I think there are 'major market segments' they don't compete in.
Can you say "Pffftt"? We will steal the Turk market, and then control the gateway. I couldn't care less about the Continental Euros (the nominal EU), but as long as we can work out good - profitable, for both sides - deals with Britian and Turkey, then we're set. That's all we need. Oh, BTW - We're about to 'steal' 70% of Europe's oil reserves. Let them think about *that* as they send their proclamations of opposition to the UN... When we move into Iraq, Iran's oil supply line will be threatened in the short term. We will actually force a resolution of the political situation there by our actions in Iraq. First Iraq's oilfields will gush, and then Iran's oilfields will rain friggen rivers of black gold... Wonder where this leaves the Saudis? Can you say [fuq'ed]? And we will soon thereafter control both. Because the EU didn't want to get involved... Don't worry you Euros, we'll help them to sell you some oil...
MadMax, My gut response was the same as yours, initially. Then sanity set in. Both sides must abide by the same rules. We have already enforced other WTO sanctions against the EU, why not the other way around? I also think that this should be viewed more as a little squabble between firends, not a battle between adversaries. treeman, What?! Did you forget some people live in Iraq? No matter what occurs between US and Iraq, it will remain their oil, not ours. The new government would be deomcratic, not US-selected, and potentially anti-US (with elections you role the dice). Iraq will not be, pardon-me, our oil-b****. Do you think the Arab nations will allow a puppet? Have you learned nothing about our past errors? Pardon-me again, but the puppet concept sucks.
treeman, don't count on it. If we steal from the EU, guess what, we just lost our greatest ally, Grat Britian. Then who's goign to be our great ally? The Israeli's? Now one can say "Pfft" . Let say we go into Iraq, to *steal* the fields. Well, not just the EU's threatened but so is Russia and China. If your threatened, you usually attack, like the US is going to do to Iraq? So, now we've Russia, China, and Europe pissed at us, well they'll form one large ass coaltion and getting those feilds back.
Well, there is probably more sweet software coming out of Israel than the EU. And why would Russia, which has the largest oil reserves in the world, be threatened by anything we do in the Middle East? China can't take Taiwan back. You think they can get troops to the ME to take on the US? Not saying I'm for taking over there, but you're being silly. Not to mention the only effective fighting force the EU has is the US dominated NATO, lol.
MadMax, I believe you are a lawyer as well. Therefore, I am very surprised by your posts in this thread. One occasion, among others, on which I studied the WTO rules, was by attending classes held by Prof. Gaines at the University of Houston Law Center. Not only from what I remember from these classes, it is pretty much crystal clear to me that the US is in violation of WTO rules in these cases. You cannot impose sanctions when the rules are in your favor and then ignore the rules when you need it. "...these guys have protected their markets with tariffs for years now...now they pull this" seems like a very unsubstantiated and uninformed statement to me. However, let's not get into a discussion where we discuss who has broken more WTO rules - plus, enforceability is a separate issue altogether. It just surprises me to read posts like this from a lawyer where you seem to acknowledge that rules have been violated and then just brush it off by saying it should not be enforced. And treeman, sorry to say, but you are mixing up things in your post. It sounds confused and confusing.
We will steal the Turk market, and then control the gateway. I couldn't care less about the Continental Euros (the nominal EU), but as long as we can work out good - profitable, for both sides - deals with Britian and Turkey, then we're set. That's all we need. Oh, BTW - We're about to 'steal' 70% of Europe's oil reserves. Let them think about *that* as they send their proclamations of opposition to the UN... When we move into Iraq, Iran's oil supply line will be threatened in the short term. We will actually force a resolution of the political situation there by our actions in Iraq. First Iraq's oilfields will gush, and then Iran's oilfields will rain friggen rivers of black gold... Wonder where this leaves the Saudis? Can you say [fuq'ed]? And we will soon thereafter control both. And then people wonder why other nations hate us...
For instance, there are many areas of enterprise software ('major market segments') that Microsoft does not compete in. Consider an enterprise software deal can go from $150,000 to $20,000,000, Microsoft is involved in enterprise software development. Again, I ask you, based on your original post: <I>What EU company competes with Microsoft??? </I> Did you really not know that there are games, spreadsheet, and word processor software companies in Europe? Or how about web development tool companies? Development software companies? Did you really think Europe doesn't have ANY companies ANY of these segments?
I agree. And my company competes with MSN which is awfully tough since Microsoft uses every trick in the book to abuse their competitive advantage in the desktop and browser market to push MSN. Our parent company is actually a US based company. Microsoft also competes in the Enterprise Portal market with companies in Europe like SAP. I could name more examples.
