Foreign Sales Corporation

Latest News

The Senate has given final passage to a tax-cut bill that includes repeal of corporate tax breaks that the World Trade Organization (WTO) has ruled are illegal export subsidies. Passage of the provision ends a long-standing trade dispute, and a European Union official has indicated pending retaliatory trade sanctions against the United States would be suspended. The Senate passed the five-year, $70 billion tax bill 54-44 late May 11, a day after the House of Representatives passed it 244-185. President Bush has indicated he will sign the bill, which includes tax cuts he long has sought. At issue are remnant tax breaks from the Foreign Sales Corporation (FSC) and the successor Extraterritorial Income Exclusion Act (ETI). After the WTO ruled in cases brought by the EU that those credits violated a subsidies agreement, Congress repealed nearly all of them over a two-year transition ending in 2006. Congress left in place, however, a few tax breaks that were included in binding contracts made before September 17, 2003, including contracts made by U.S. aircraft manufacturer Boeing. In yet another challenge brought by the EU, the WTO ruled that both the two-year transition and the excluded credits were not in compliance with the earlier dispute-settlement decisions. The provision in the tax bill would not alter the two-year transition but would repeal the exclusions for the binding contracts.

• Congress Passes Bill Ending WTO Export Tax Break Dispute with EU (May 12, 2006)
• Bill Would Repeal Remaining U.S. Export Credits Ruled Out by WTO (May 10, 2006)
• U.S. Urges EU Not To Reimpose Duties After WTO Tax Break Ruling (Feb 13, 2006)
• Zoellick in Brussels Discusses Airbus, China Arms Embargo, Visas (Apr 5, 2005)
• Senator Grassley Concerned at EU Actions on Trade Disputes (Nov 19, 2004)
• Bush Signs Law Repealing U.S. Tax Breaks Ruled Illegal by WTO (Oct 22, 2004)
• USTR Zoellick Urges EU to Lift Sanctions Over Export Tax Breaks (Oct 14, 2004)
• Congress Approves Repeal of Disputed Export Tax Breaks (Oct 12, 2004)
• House Passes Bill Repealing Export Tax Breaks Ruled WTO-Illegal (Oct 8, 2004)
• House Moves Toward Passage of Bill Repealing Export Tax Breaks (Oct 7, 2004)
• Obstacles Remain to Congress' Repealing U.S. Tax Export Breaks (Oct 5, 2004)
• Senate Approves Bill to Repeal WTO-Illegal Export Tax Breaks (Jul 16, 2004)
• House Vote on Tobacco Could Imperil Fix For U.S. WTO Violations (Jul 14, 2004)
• Scholar Testifies to House Committee on WTO, U.S. Tax Policy (Jul 7, 2004)
• Strategy for Strengthening EU-U.S. Economic Partnership Outlined (Jun 26, 2004)

Major Statements & More

• Congress Passes Bill Ending WTO Export Tax Break Dispute with EU (May 12, 2006)
• Bill Would Repeal Remaining U.S. Export Credits Ruled Out by WTO (May 10, 2006)
• U.S. Urges EU Not To Reimpose Duties After WTO Tax Break Ruling (Feb 13, 2006)
• Bush Signs Law Repealing U.S. Tax Breaks Ruled Illegal by WTO (Oct 22, 2004)
• USTR Zoellick Urges EU to Lift Sanctions Over Export Tax Breaks (Oct 14, 2004)

U.S.-EU Highlights

2006: Commission Press Release: EU Suspends FSC Countermeasures (May 16, 2006) | Congress Passes Bill Ending WTO Export Tax Break Dispute with EU (May 12, 2006) | Bill Would Repeal Remaining U.S. Export Credits Ruled Out by WTO (May 10, 2006) | U.S. Urges EU Not To Reimpose Duties After WTO Tax Break Ruling (Feb 13, 2006)

2005: Zoellick in Brussels Discusses Airbus, China Arms Embargo, Visas (Apr 5, 2005)

2004: Senator Grassley Concerned at EU Actions on Trade Disputes (Nov 19, 2004) |  Bush Signs Law Repealing U.S. Tax Breaks Ruled Illegal by WTO (Oct 22, 2004) | Bush Statement March 1 Urging Repeal of Export Tax Breaks (Mar 5, 2004) | EC Delegation to U.S. Fact Sheet on FSC (Feb 2004)

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