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Volume5
MonthMay
Year2004
TitleFishing for Rainbows, the FSC Repeal and Extraterritorial Income Exclusion Act
Author(s)Stuart Smith
First Page503
AbstractOn August 30, 2002, the final decision was released in the case of United States-Tax Treatment for "Foreign Sales Corporations". The World Trade Organization arbitration panel report authorizes the European Communities to levy $4.043 billion in annual trade sanctions against imports from the United States because of a provision in the U.S. tax code. "The FSC Repeal and Extraterritorial Income Exclusion Act of 2000", the most recent of 40 years worth of half-hearted attempts by the United States to comply with world trading body regulations, is the current offender. According to the arbitration panel, the act subsidizes foreign sales by U.S. corporations by relying upon export-based contingencies, and is inconsistent with the obligations of the United States under both the Agreements on Subsidies and Countervailing Measures ("SCM Agreement") and the Agreement on Agriculture.