United States – Tax treatment for "foreign sales Corporations"

Recourse to Article 21.5 of the DSU by the European Communities

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

            The following notification, dated 15 October 2001, sent by the Permanent Mission of 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" – Recourse to Article 21.5 of the DSU by the European Communities (WT/DS108/RW) and certain legal interpretations developed by the Panel.

1.                  The United States seeks review by the Appellate Body of the Panel's findings that the FSC Repeal and Extraterritorial Income Exclusion Act of 2000 ("ETI Act") involves export subsidies prohibited by Article 3.1(a) of the  Agreement on Subsidies and Countervailing Measures ("SCM Agreement"), and the corollary finding that the United States has acted inconsistently with its obligation under Article 3.2 of the  SCM Agreement.  These findings are in error, and are 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: