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WTO decision forces Congress's hand. (Government).

The European Union will be able to impose $4.043 billion in import duties on U.S. exports if the U.S. doesn't change the Foreign Sales Corporation (FSC) provisions of U.S. tax law. That was the decision of the World Trade Organization (WTO) in late August in a long-running case that hasn't run its course yet. The U.S. contended that sanctions should have been limited to $1 billion based on the actual impact of the FSC provisions on EU commercial interests. The WTO has ruled the FSC an impermissible export subsidy. U.S. Trade Representative Robert B. Zoellick says, "The Executive branch will work with Congress to fully comply with our WTO obligations." Rep. Bill Thomas (R.-Calif.), chairman of the House Ways & Means Committee, has introduced the American Competitiveness and Corporate Responsibility Act (H.R. 5095), which makes requisite changes in the FSC and also deals with the corporate inversion problem, where U.S. corporations locate headquarters offshore to avoid U.S. taxes.
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Title Annotation:World Trade Organization, U.S foreign sales corporation tax provisions
Publication:Strategic Finance
Article Type:Brief Article
Geographic Code:4E
Date:Nov 1, 2002
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