The EU called off its sanctions on $4 billion worth of US goods today after Washington repealed illegal export tax subsidies, bringing some balm to transatlantic ties wounded by a battle over Airbus and Boeing.
But the European Union left the door open to hit back over loopholes in the law that could keep benefits flowing for giants such as Microsoft, Motorola, General Electric and Boeing itself.
European Trade Commissioner Pascal Lamy said the EU would seek consultations with the World Trade Organisation (WTO) to establish whether surviving subsidies under the United States' Foreign Sales Corporation (FSC) system complied with international regulations.
"We have been trying to put FSC to bed for a long time," he told a news conference, announcing that he would recommend an end to the 25-nation bloc's sanctions from January 1st, 2005. "It is now in bed, but we need to just check before the lights go out."
The EU slapped an initial duty of 5 percent on US imports in March because of Congress' failure to repeal the tax breaks for exporters, which the WTO had declared illegal.
Those duties - which hit a broad range of steel, textiles, paper and other products - were subsequently ratcheted up to 12 per cent and were due to go on rising by one percentage point each month until the offending tax breaks were removed.
Mr Lamy said that, to date, the EU had taken $200-300 million in extra revenues as a result of the penalties on US exports.