UNITED STATES – TAX TREATMENT FOR

"FOREIGN SALES CORPORATIONS"

Notification of an Appeal by the United States under

paragraph 4 of Article 16 of the Understanding on Rules

and Procedures Governing the Settlement of Disputes (DSU)

            The following notification, dated 26 November 1999, sent by the United States to the Dispute Settlement Body (DSB), is circulated to Members.  This notification also constitutes the Notice of Appeal, filed on the same day with the Appellate Body, pursuant to the Working Procedures for Appellate Review.

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            Pursuant to Article 16 of the  Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) and Rule 20 of the Working Procedures for Appellate Review, the United States hereby notifies its decision to appeal to the Appellate Body certain issues of law covered in the panel report on  United States – Tax Treatment for "Foreign Sales Corporations" (WT/DS108/R) and certain legal interpretations developed by the panel.

1.         The United States seeks review by the Appellate Body of the panel's finding that the tax exemption provided by the Foreign Sales Corporation (FSC) provisions of the U.S. Internal Revenue Code constitutes an export subsidy prohibited by Article 3.1(a) of the Agreement on Subsidies and Countervailing Measures (SCM Agreement).  This finding is in error, and is based upon erroneous findings on issues of law and on related legal interpretations with respect to various provisions of the SCM Agreement and other covered agreements, including: