united states - tax treatment for
"foreign sales corporations"
Recourse to Article 21.5 of the DSU by
the European Communities
Request
for the Establishment of a Panel
The following
communication, dated 7 December 2000, from the Permanent Delegation of the
European Commission to the Chairman of the Dispute Settlement Body, is
circulated pursuant to Article 21.5 of the DSU.
_______________
On 17 November
2000, the Ambassador to the WTO of the United States of America (US) informed
the European Communities (EC) that on 15 November 2000 the US President signed
into law H.R. 4986, the FSC Repeal and Extraterritorial Income Exclusion Act of
2000 (the "FSC Replacement Act") and that the US considered that with
this law it has implemented the recommendations and rulings of the WTO Dispute
Settlement Body in United States - Tax
Treatment for "Foreign Sales Corporations", WT/DS108. The FSC Replacement Act was adopted 14 days
after the extended deadline granted by the Dispute Settlement Body (DSB) to the
US to implement the WTO recommendations and rulings on the above-mentioned
dispute, i.e. 1 November 2000.
In the view of the
EC, the FSC Replacement Act fails to bring the US into compliance with the DSB
recommendations and rulings in United
States - Tax Treatment for "Foreign Sales Corporations", WT/DS108 and is inconsistent with the covered
agreements. The FSC Replacement Act provides equally prohibited subsidies
to US exporters as did the FSC scheme and introduced further prohibited
subsidies to certain foreign corporations.
On 17 November 2000
the EC initiated the procedures under Article 21.5 of the Understanding on
Rules and Procedures Governing the Settlement of Disputes (DSU) by requesting
the United States to enter into consultations.
The request was circulated in document WT/DS108/14 of 21 November
2000. Consultations were held on 4
December 2000 in Geneva. Consultations
have allowed a better understanding of the respective positions but have failed
to settle the dispute.