The European Union was authorized to apply penalty duties on U.S. products if the deadline was missed. As the deadline approached, it became clear that repealer legislation would not be enacted prior to the deadline. In a last minute deal, the U.S. and the E.U. agreed to an extension of the time for enactment of repealer legislation. The new due date is November 1, 2000. In the meantime, the repealer legislation is being held up in the Senate.
Several reasons exist for the delay.
First, there is a technical difference between the House and Senate versions of the bill. The House bill would allow U.S. companies to claim a dividends received deduction for distributions received from foreign subsidiaries to the extent the dividend arises from qualified international operations. The premise of this provision is that the income would be exempt if derived directly by a U.S. company. Consequently, comparable treatment should be allowed when the income is derived by a foreign subsidiary and the resulting earnings are distributed to the U.S. parent. The Senate version expressly removes that provision from the replacement legislation, ostensibly to comply with the WTO ruling.