[Congressional Record Volume 142, Number 138 (Monday, September 30, 1996)]
[Senate]
[Page S12025]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                FOREIGN DIFFERENTIAL EXPORT TAX SCHEMES

 Mr. GRASSLEY. Mr. President, last month when we were 
considering legislation to extend the Generalized System of Preferences 
[GSP], I raised an issue involving an unfair trade practice that has 
been of great concern to U.S. growers and processors of soybeans. I 
described a tax policy employed by certain countries, including some 
who are major beneficiaries of the GSP program, to give their 
processors and exporters of agricultural products an unfair competitive 
advantage in world markets. This policy is used particularly to benefit 
foreign soybean meal and oil processors and exporters.
  This tax policy, known as a differential export tax scheme [DET], in 
effect operates as an indirect subsidy for exports of soybean meal and 
oil, permitting oilseed processors in those countries to underprice 
their competitors and obtain greater market shares for these products. 
As a consequence, the United States share of the world export market 
for soybean products has declined significantly, while the countries 
that engage in these trade-distorting practices, such as Brazil and 
Argentina, continue to experience tremendous export growth in these 
same products. Moreover, these tax schemes have had the effect of 
creating artificial downward pressure on world price levels for these 
products, which has severely reduced U.S. soybean industry revenues.
  In my statement last month, I cited the tax structure utilized by the 
State of Rio Grande do Sul in Brazil as a particularly egregious case 
in point. At that time, I noted the commitment of the Brazilian Federal 
Government to reforming that system. I am pleased to report that 
earlier this month, the Government of Brazil enacted reform legislation 
that eliminates these taxes on exports of raw materials and semi-
manufactured goods. I want to publicly congratulate the Government of 
Brazil for this major accomplishment. I hope the example of leadership 
that Brazil has set in taking this important step will encourage other 
countries that continue to utilize these tax schemes to take similar 
steps toward free and fair trade. I will continue to carefully monitor 
these developments and, as I noted in my previous statement, I am 
prepared to consider appropriate measures to encourage further progress 
in this regard.

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