1.
The United States and the
European Communities appeal certain issues of law and legal interpretations in
the Panel Report, United States –
Tax Treatment for "Foreign Sales Corporations" (the "Panel
Report").[1] The Panel was established to consider a
complaint by the European Communities with respect to "Sections 921-927 of
the Internal Revenue Code and related measures establishing special tax
treatment for 'Foreign Sales Corporations' ('FSCs')".[2] Pertinent aspects of this
"FSC measure"[3]
are described in Section II below.[4]
2.
In the Panel Report, circulated
on 8 October 1999, the Panel concluded that, through the FSC measure:
(a) the United States has, except as provided
in the Agreement on Agriculture, acted inconsistently with its obligations
under Article 3.1(a) of the SCM Agreement by granting or maintaining
export subsidies prohibited by that provision;
(b) the United States has acted
inconsistently with its obligations under Article 3.3 of the Agreement on
Agriculture (and consequently with its obligations under Article 8 of that
Agreement):
[1]WT/DS108/R,
8 October 1999.
[2]The
Panel's terms of reference, WT/DS108/3, 11 November 1998, refer to the
European Communities' request for consultations, WT/DS108/1, 28 November
1997.
[3]In
paragraph 7.34 and footnote 602 thereto of the Panel Report, the Panel
identified sections 245(c), 921 through 927, and 951(e) of the United States
Internal Revenue Code as the "primary" legal provisions constituting
the FSC measure. This finding has not
been appealed.
[4]The
Panel describes the FSC measure in paragraphs 2.1 to 2.8 of the Panel Report.