The US confirmed yesterday that it would appeal a ruling that US export tax breaks for its firms, fall foul of World Trade Organisation rules, trade sources said. The US delegation told a meeting of the 142-member WTO's dispute settlement body that it was appealing the decision. A panel to examine the appeal has 60 days to publish its findings.

The dispute centres on a US law allowing exporters to set up offshore trading firms, called foreign sales corporations, through which they can sell goods overseas and pay sharply reduced US taxes. The EU has complained that these tax breaks represent a de facto subsidy that put US corporations at an unfair advantage over European rivals. The WTO ruled against the US last year and Congress then passed new legislation to comply with the ruling. But the EU complained to the WTO that the legislation was inadequate and the WTO agreed last August that the US was still in violation.