US manufacturers will enjoy a new, lower tax rate

The bill repeals export tax breaks worth about $5bn a year which Brussels says are a subsidy for US firms.

The money saved is to be used to fund a tax cut for manufacturers, who are losing ground in global markets.

The bill also seeks to channel cash raised by closing tax loopholes into a round of fresh tax breaks.

The European Union imposed retaliatory import duties on a range of US goods in March this year after the World Trade Organisation ruled that the export tax breaks were illegal.

When a version of the bill was passed by the US Senate last month, EU Trade Commissioner Pascal Lamy said its final approval would spell an end to the EU sanctions.

Tax cut controversy

But the new tax reductions set out in the bill have proved controversial.

One representative, Massachusetts Democrat James McGovern, described the package as "a goody bag of corporate tax giveaways".

A proposal to pay $10bn to tobacco growers to compensate them for the abolition of an existing price support system has come under particular criticism from some representatives.

There are also fears that a round of proposed tax cuts for US multinationals could encourage companies to shift production and jobs abroad.

Other beneficiaries of the bill include companies that make hunting and fishing equipment, property investors, and cruise ship operators.

Although most of the new tax breaks will be paid for by clamping down on existing tax loopholes, the bill will still cost the US Treasury about $34bn over the next 10 years.

The versions of the bill passed by the House and the Senate must now be reconciled before being sent to President George W. Bush for final approval.