WASHINGTON (AP) – A major rewrite of corporate tax law that would end a nasty trade dispute with Europe won approval Wednesday from congressional negotiators after House Republicans beat back efforts to increase regulation of tobacco.

The measure would repeal a tax break for thousands of American exporters that has been ruled illegal by the World Trade Organization. As a replacement, the proposal offers more than $140 billion in tax breaks for a wide range of businesses, from multinational companies to bow and arrow makers.

Fishermen, farmers and taxpayers in states that do not have individual state income taxes would also benefit.

Supporters of the tax bill expressed hope that the full House and Senate will approve it before lawmakers’ scheduled adjournment at week’s end, ahead of the Nov. 2 election.

A House vote could come as early as today. The timing of Senate debate was in greater debate because negotiators’ action on tobacco displeased some senators.

The House-Senate conference committee approved a $10.1 billion buyout to provide tobacco farmers with payments for selling back to the government the quotas they own and which govern how much tobacco can be grown each year.

Negotiators rejected a Senate plan that linked the buyout to allowing tobacco regulation by the Food and Drug Administration.

Supporters of that idea were upset that House Republicans on the committee blocked efforts by Sens. Edward Kennedy, D-Mass., and Tom Harkin, D-Iowa, to include the FDA regulation in the compromise bill.

“This bill would not have passed the United States Senate without the FDA provision in it. So what the conferees have done is remove the lynchpin in the passage of this legislation in a complete sellout to the tobacco companies,” said Sen. John McCain, R-Ariz..

Some senators have raised the possibility of stalling the tax legislation if the FDA regulation were removed. But Sen. Mike DeWine, R-Ohio, said, “I’m not going to get into tactics.”

Republicans, counting on the election, believe that Democrats will not want to delay passage of legislation that offers buyouts that are popular in the tobacco-growing states in the South where Senate seats are at stake.

Underscoring that point, Democrat Erskine Bowles, in a tight race in North Carolina to succeed Democratic Sen. John Edwards, broke off campaigning on Wednesday to fly to Washington and lobby senators to pass the tax bill even without the FDA regulation.

The presidential race also was a factor in the debate.

President Bush took an arms-length approach to the legislation in an effort to ward off attacks from Democratic rival John Kerry over the many corporate tax breaks in the bill.

In a letter this week, Treasury Secretary John Snow praised Congress for moving to repeal the export subsidy. But he said the legislation contained a “a myriad of special interest tax provisions that benefit few taxpayers and increase the complexity of the tax code.”

House Ways and Means Committee Chairman William Thomas, R-Calif., predicted that the administration, “if not ecstatic, will certainly be pleased” by passage of legislation needed to repeal the outlawed subsidy and end retaliatory tariffs on 1,600 American exports to Europe.

Those tariffs began at 5 percent last March. They now stand at 12 percent, rising by 1 percentage point for each month that Congress failed to act.

The measure approved by the conference committee takes the $57.7 billion saved over 10 years by eliminating the export subsidy and uses that money to help provide more than $130 billion in new tax breaks.

The biggest one is a deduction that would cost $76.5 billion over 10 years and help U.S. manufacturers. But manufacturing is broadly defined to include construction companies as well as engineering and architectural firms.

The bill would reinstate the deductibility of state sales taxes on individuals’ federal income tax returns. This plan is popular in the seven states that do not have state income taxes but do have state sales taxes-Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming. The bill also would allow for local sales taxes to be deducted from federal returns, a provision that will help residents of the seven states who pay local sales taxes. It will also aid residents of some areas of Alaska, who must pay local sales taxes but have no state sales tax.

In order to keep the bill from increasing the budget deficit, the legislation would raise an additional $81.7 billion by closing various corporate loopholes and tax shelters.

Corporate watchdog groups complained that the legislation does not go far enough to close loopholes and went too far in providing new corporate tax breaks.

“Instead of simply repealing the illegal subsidies, Congress is preparing to enact massive new corporate tax breaks,” said Fair Taxes for All, a coalition of groups that lobby on tax issues.

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Associated Press writer Aparna Kumar contributed to this story.

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