The American Jobs Creation Act of 2004, signed into law by President Bush last Friday, seems to have achieved its main goal of getting the European Union to lift $4 billion worth of sanctions on U.S. goods.

The EU's trade commissioner, Pascal Lamy, announced Monday that the sanctions would be suspended - but also said that the EU would ask the World Trade Organization to examine some of the provisions of the act.

The act was originally created to repeal the foreign sales corporation/extra-territorial income provisions of the U.S. Tax Code, which the WTO had ruled were illegal export subsidies, allowing the EU to levy tariffs of 5 percent against U.S. goods beginning in March; the sanctions rose by 1 percent a month and had reached 12 percent when they were suspended.

Lamy made clear that it was only a suspension, due to European concerns over subsidies that survived in the act. "We have been trying to put the FSC to bed for a long time," he said at a press conference, according to a Reuters report. "It is now in bed, but we need to just check before the lights go out."

Of particular concern was a "grandfathering" clause that allows certain companies to continue receiving tax breaks through 2006, and in some cases for even longer.

The EU had taken in between $200 million and $300 million in extra revenues as a result of the sanctions.

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