May 15, 2006. /Lesprom Network/. W. Henson Moore, president and CEO of the American Forest & Paper Association (AF&PA) expressed on May 12 his appreciation for this week’s actions in Washington and in Brussels to head off potential European Union tariffs on certain U.S. products, including $167 million worth wood and paper products, that could have damaged the ability of U.S. companies to sell those products in Europe. On Wednesday, the U.S. House of Representatives passed a tax bill that would repeal the current law that grandfathers the Foreign Sales Corporation/Extraterritorial Income (FSC-ETI) tax benefits for some companies. The Senate followed suit on Thursday and president Bush will sign the bill next week. In light of the Congressional action, EU trade commissioner Peter Mandelson announced Friday that the European Commission had dropped its plans to impose the 14% tariffs that were scheduled to begin on Tuesday, May 16. “In absence of this bill being passed, American forest products companies would be facing crippling tariffs on a number of products, starting Tuesday,” said Mr. Moore. “Now, thanks to the Congressional action, and the EU’s quick response, U.S. companies will continue to have a fair chance to sell their products in Europe.” In 2001, the World Trade Organization found the FSC-ETI tax provisions to be an unfair trade subsidy, and authorized the E.U. to impose retaliatory tariffs on more than 1 600 U.S. products, including more than 165 forest and paper items valued at over $220 million annually. The tariffs were imposed throughout 2004 until Congress repealed FSC-ETI in October of that year. However, Congress did allow certain companies to continue to benefit from FSC-ETI by “grandfathering in” certain contracts already in existence at the time of the legislation being signed into law. The EU took the grandfathering provision back to the WTO, who ruled that the EU could reimpose the tariffs. “Hopefully, this ends the controversy over FSC-ETI once and for all,” concluded Mr. Moore. “U.S. forest products companies have a hard enough time competing for market share against foreign companies, without being disadvantaged by punitive tariffs such as these. I applaud Congress for passing its bill and heading this off before the tariffs were reimposed, and I thank commissioner Mandelson for moving with such speed to prevent the tariffs for going into effect.” The American Forest & Paper Association (AF&PA) is the national trade association of the forest, pulp, paper, paperboard and wood products industry.