|Foreign Sales Corp. (FSC) tax break
Provides a tax benefit to corporations by exempting sales made overseas by subsidiaries from earnings for U.S. tax purposes.
|WTO DS 108. In Oct. 1999 the WTO ruled in favor of EU claims that the FSC was an illegitimate export subsidy. The U.S. then modified the law to implement the WTO ruling. The amended law (the Extra-Territorial Income regime) was again challenged by the EU and ruled WTO-illegal. The U.S. lost its second appeal in Jan. 2002 and in Aug. 2002, the WTO panel found the EU entitled to impose $4 billion in sanctions.
||The EU has set a Mar. 1 deadline for sanctions, although it has indicated some flexibility if one house of Congress passes legislation that meets EU approval by that date. Sanctions will start with a 5% tariff on listed U.S. products that will be increased by 1% a month until it reaches 17%. The EU target list includes 1.4 billion euros ($1.6 billion) of U.S. pearls, diamonds, and precious metals, as well nuclear reactors, boilers and a range of paper and pulp products.
|The “Byrd Amendment”, i.e., the Continued Dumping and Subsidy Offset Act of 2000
Distributes duties from trade remedy laws to petitioning companies.
|WTO DS 217/234. In a case brought by Australia, Brazil, Canada, Chile, the EC, India, Indonesia, Japan, Korea, Mexico and Thailand, the WTO ruled in 2001 that the redistribution of AD/ CVD penalty funds to the U.S. companies constituted an improper remedy against dumping. Deadline for compliance was Dec. 27, 2003.
||Eight of the complaining countries filed requests for sanctions with a WTO arbitration panel Jan. 26, 2004. A decision on the level of permitted sanctions is expected later in 2004. 70 U.S. Senators have signed a letter to the Bush administration asking that they pursue negotiations to include the Byrd Amendment in WTO agreements.
|The 1916 Anti-Dumping Act (sec. 801 of the 1916 Revenue Act)
Allows private party lawsuits for treble damages for unfair pricing in the U.S. if intent to injure the competition can be shown.
|WTO DS 136/162. In 1999, the WTO ruled that the statute’s focus on another country’s “intent to dump” went beyond the scope of domestic AD/ CVD laws permitted under WTO rules. The panel also ruled that the penalties exceeded WTO terms. The U.S. unsuccessfully appealed in 2000 and the deadline for compliance was in 2002.
||On Sept. 22, 2003, the EU formally asked the WTO to set the level of sanctions that it could apply to U.S. products. On Feb. 23, 2004, the WTO ruled that the EU cannot implement its own treble damages law as a retaliatory measure – but can impose sanctions up to the amount of losses suffered in claims under the 1916 Act.
|Anti-Dumping Measures Against Certain Hot-Rolled Steel Products from Japan
||WTO DS 184/244. In this case, Japan challenged the determinations of the anti-dumping investigations of the U.S. Department of Commerce and the U.S. International Trade Commission on their anti-dumping investigations of Certain Hot-Rolled Steel Products from Japan, charging that they were reached using “deficient procedures” under the Tariff Act of 1930 that were forbidden by the WTO.
||After the U.S. missed a deadline for compliance in Dec. 2003, the WTO extended the deadline until July 31, 2004.