[Federal Register Volume 63, Number 193 (Tuesday, October 6, 1998)]
[Notices]
[Page 53742]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-26702]



[[Page 53742]]

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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE


WTO Dispute Settlement Proceeding Regarding the Tax Treatment for 
Foreign Sales Corporations (Docket No. WTO/D-27)

AGENCY: Office of the United States Trade Representative.

ACTION: Notice; request for comments.

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SUMMARY: Pursuant to section 127(b)(1) of the Uruguay Round Agreements 
Act (URAA) (19 U.S.C. 3537(b)(1)), the Office of the United States 
Trade Representative (USTR) is providing notice that a dispute 
settlement panel has been established under the Marrakesh Agreement 
Establishing the World Trade Organization (WTO) to examine the Foreign 
Sales Corporation (FSC) provisions of the U.S. Internal Revenue Code.

DATES: Although USTR will accept any comments received during the 
course of the dispute settlement proceedings, comments should be 
submitted on or before November 2, 1998, to be assured of timely 
consideration by USTR in preparing its first written submission to the 
panel.

ADDRESSES: Comments may be submitted to Sandy McKinzy, Litigation 
Assistant, Office of Monitoring and Enforcement, Room 501, Attn: FSC 
Dispute, Office of the U.S. Trade Representative, 600 17th Street, NW., 
Washington, DC 20508.

FOR FURTHER INFORMATION CONTACT: William D. Hunter, Office of the 
General Counsel (202) 395-3582.

SUPPLEMENTARY INFORMATION: By letter dated July 1, 1998, the European 
Communities requested the establishment of a panel to examine the FSC 
provisions (sections 921-927) of the U.S. Internal Revenue Code. On 
September 22, the WTO Dispute Settlement Body established a panel.

Major Issues raised by the European Communities and Legal Basis of 
Complaint

    In their request for the establishment of a panel, the European 
Communities allege that the FSC provisions are inconsistent with 
several provisions of the WTO agreements, including the following 
specific allegations:

--The exemptions from U.S. direct (income) taxes of a portion of FSC 
income related to exports and of dividends distributed to U.S. parent 
companies constitute prohibited export subsidies under Article 3.1(a) 
of the Agreement on Subsidies and Countervailing Measures (SCM 
Agreement);
--The requirement that the tax exemption under the FSC provisions is 
limited to receipts from the export of products having at least 50% 
U.S. origin by market value renders the FSC provisions a prohibited 
import substitution subsidy under Article 3.1(b) of the SCM Agreement;
--Because the United States allegedly has not taken the FSC provisions 
into account for the purpose of compliance with U.S. commitments under 
the Agreement on Agriculture, there is a violation of Articles 3 and 8 
of that agreement read in conjunction with Articles 9(1)(d), 10(1) and 
10(3) of that agreement.

Public Comment: Requirements for Submissions

    Those persons wishing to submit written comments should provide 
fifteen (15) typed copies (in English) to Sandy McKinzy, Litigation 
Assistant, Office of Monitoring and Enforcement, Room 501, Attn: FSC 
Dispute, Office of the U.S. Trade Representative, 600 17th Street, 
N.W., Washington, DC 20508.
    If the submission contains business confidential information, 
fifteen copies of a confidential version must also be submitted. A 
justification as to why the information contained in the submission 
should be treated confidentially must be included in the submission. In 
addition, any submissions containing business confidential information 
must be clearly marked ``Confidential'' at the top and bottom of the 
cover page (or letter) and of each succeeding page of the submission. 
The version that does not contain confidential information should also 
be clearly marked, at the top and bottom of each page, ``public 
version'' or ``non-confidential.''
    Pursuant to section 127(e) of the URAA (19 U.S.C. 3537(e)), USTR 
will maintain a file on this dispute settlement proceeding, accessible 
to the public, in the USTR Reading Room: Room 101, Office of the United 
States Trade Representative, 600 17th Street, NW., Washington, DC 
20508. The public file will include the U.S. submissions to the panel 
in the proceeding; the submissions, or non-confidential summaries of 
submissions, to the panel received from other participants in the 
dispute, as well as the report of the dispute settlement panel and, if 
applicable, the report of the Appellate Body. The public file also will 
include written comments submitted in connection with this request, 
except for information granted ``business confidential'' status 
pursuant to 15 CFR 2003.6 An appointment to review the public file 
(Docket WTO/D-27 (``U.S.-Tax Treatment for Foreign Sales 
Corporations'') may be made by calling Brenda Webb, (202) 395-6186. The 
USTR Reading Room is open to the public from 9:30 a.m. to 12 noon and 1 
p.m. to 4 p.m., Monday through Friday.
Frederick L. Montgomery,
Chairman, Trade Police Staff Committee.
[FR Doc. 98-26702 Filed 10-5-98; 8:45 am]
BILLING CODE 3190-01-M