1.
The United States appeals
certain issues of law and legal interpretations in the Panel Report, United States – Tax Treatment for "Foreign Sales Corporations" – Recourse to Article 21.5. of the DSU by
the European Communities (the "Panel Report").[1] The Panel was established to consider a
complaint by the European Communities concerning the consistency of the United
States FSC Replacement and Extraterritorial Income Exclusion Act (the "ETI
Act") [2]
with the Agreement on Subsidies and
Countervailing Measures (the "SCM
Agreement"), the Agreement
on Agriculture, and the General
Agreement on Tariffs and Trade 1994 (the "GATT
1994"). The ETI Act is a measure
taken by the United States with a view to complying with the recommendations
and rulings of the Dispute Settlement Body (the "DSB") in United States – Tax Treatment for
"Foreign Sales Corporations" ("US – FSC ").[3]
Pertinent aspects of the ETI Act are described in Section II below,
as well as in paragraphs 2.1-2.8 of the Panel Report.
[1]WT/DS108/RW,
20 August 2001.
[2]United
States Public Law 106-519, 114 Stat. 2423 (2000).
[3]The recommendations and rulings of the DSB resulted from the
adoption, by the DSB, of the Appellate Body Report in US – FSC, WT/DS108/AB/R, adopted 20
March 2000 (the "original Appellate Body Report"). In this Report, we refer to the panel that
considered the original complaint brought by the European Communities as the
"original panel" and to its report as the "original panel
report".