The U.S. Congress failed in its attempt to repeal an export tax break and bring its laws in line with global trade rules, the World Trade...

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The U.S. Congress failed in its attempt to repeal an export tax break and bring its laws in line with global trade rules, the World Trade Organization ruled yesterday.

The WTO backed a European Union complaint that the U.S. gives unfair tax breaks to companies, reviving the possibility that the EU may re-impose $4 billion in sanctions against American goods, people familiar with the decision said.

The Geneva-based WTO said the U.S. is failing to comply with a January 2002 ruling that outlawed tax breaks to exporters, said the people, who declined to be identified. The WTO found that the U.S. is still in violation because companies such as Microsoft and Boeing continue to get breaks even after Congress passed new tax legislation in October, according to the people.

The EU argued that the tax package — the biggest rewrite of U.S. corporate tax legislation since 1986 — contains transition periods that extend the illegal breaks through at least 2006.

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Yesterday’s confidential ruling, set to be published Aug. 12, threatens to escalate tensions between the world’s two biggest economies. The $750 billion trans-Atlantic trade relationship is already strained because of dueling WTO complaints over aircraft subsidies, gene-engineered seeds and hormone-treated beef.