August 30,2002

Grassley on the WTO Trade Sanctions Ruling

M E M O R A N D U M

To: Reporters and Editors
Fr: Jill Gerber, 202/224-6522
Re: Trade sanctions ruling
Da: Friday, Aug. 30, 2002

Sen. Chuck Grassley, ranking member of the Committee on Finance, made the following
statement on the World Trade Organization arbitrator’s ruling that the European Union is entitled
to impose more than $4 billion in trade sanctions against the United States.

“Of course, I’m disappointed by the arbitrator’s decision. $4 billion in trade sanctions is a
huge potential liability for the United States. I’m especially concerned that our agricultural
producers could bear the brunt of any trade sanctions that might be imposed. Today’s announcement
on the amount of trade sanctions at issue still leaves unanswered the basic question at the heart of
this long dispute: the unfortunate distinction in global trade rules between direct taxes on income and
indirect taxes on products. WTO rules should not favor one over the other. At some point, we must
address the competitive disadvantage this distinction creates. At our recent Finance Committee
hearing on FSC/ETI, I was pleased to obtain support from Chairman Baucus and the Administration
for a bicameral, bipartisan working group to resolve this issue. I look forward to moving this process
along.

“That said, I believe it’s critically important that the United States comply fully with the rule
of law. Many members from both houses of Congress, Republican and Democrat, and executive
branch officials have worked long and hard to resolve this dispute. We still have more work to do.
The ball is in our court.”