UNITED STATES – TAX TREATMENT FOR "FOREIGN SALES CORPORATIONS"

Recourse by the European Communities to Article 4.10 of the SCM Agreement

and Article 22.7 of the DSU

            The following communication, dated 24 April 2003, from the Permanent Delegation of the European Commission to the Dispute Settlement Body, is circulated pursuant to Article 4.10 of the SCM Agreement and Article 22.7 of the DSU.

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            The European Communities request that a special meeting of the Dispute Settlement Body be held on 7 May 2003 to consider the following agenda item:

"United States – Tax Treatment for 'Foreign Sales Corporations'

Recourse by the European Communities to Article 4.10 of the SCM Agreement and Article 22.7 of the DSU."

            On 8 October 1999, the Panel in this dispute found that the United States of America's "Foreign Sales Corporations" scheme violated Article 3.1(a) of the Agreement on Subsidies and Countervailing Measures (the "SCM Agreement") and Article 3.3 of the Agreement on Agriculture.  On 24 February 2000, the Appellate Body confirmed the findings of the Panel with respect to the violations of the SCM Agreement and modified the findings concerning the Agreement on Agriculture concluding that the Foreign Sales Corporations scheme violated Articles 10.1 and 8 of the Agreement on Agriculture.  On 20 March 2000, the Dispute Settlement Body (the "DSB") adopted the Appellate Body report and the report of the Panel, as modified by the Appellate Body.  The resulting DSB recommendations and rulings include the recommendation that the United States bring its measures found to be inconsistent with the SCM Agreement and the Agreement on Agriculture into conformity with the provisions of those agreements, and that the United States withdraw the export subsidies at the latest with effect from the 1 October 2000.