I 
112TH CONGRESS 
1ST SESSION H. R. 2666 
To neutralize the discriminatory effect of any country that employs indirect 
taxes and grants rebates of the same upon export if United States 
trade negotiating objectives regarding border tax treatment in World 
Trade Organization negotiations are not met. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 27, 2011 
Mr. PASCRELL (for himself, Mr. JONES, and Mr. MICHAUD) introduced the 
following bill; which was referred to the Committee on Ways and Means 
A BILL 
To neutralize the discriminatory effect of any country that 
employs indirect taxes and grants rebates of the same 
upon export if United States trade negotiating objectives 
regarding border tax treatment in World Trade Organi-
zation negotiations are not met. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Border Tax Equity 
Act of 2011’’. 
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SEC. 2. FINDINGS AND DECLARATIONS OF POLICY. 
(a) FINDINGS.—Congress makes the following find-
ings: 
(1) The United States largely relies on a direct 
tax system, whereas 167 countries currently employ 
one particular form of indirect tax known as value- 
added taxes (VAT) as well as direct taxes. The 
worldwide VAT tax average in 2008 was 15.2 per-
cent, and in countries of the European Union it 
ranges between 15 and 25 percent. 
(2) Under the rules of the World Trade Organi-
zation (WTO), direct taxes, such as corporate in-
come taxes, if rebated or refunded upon the export 
of goods are viewed as export subsidies and prohib-
ited on most goods and are at least potentially ac-
tionable on all goods. However, indirect taxes, such 
as sales taxes and VAT, may be rebated or refunded 
upon the export of goods and such rebate or refund 
is not defined as constituting a subsidy and hence is 
not actionable under WTO rules. 
(3) At present, there are no WTO rules on sub-
sidies as applied to trade in services. However, a 
number of countries currently impose taxes on the 
import of services and exempt or rebate or refund 
taxes upon the export of services, to the disadvan-
tage of United States services providers. 
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(4) The disparate treatment of border taxes 
detrimentally affects United States agricultural pro-
ducers, manufacturers, and service providers in 
that— 
(A) refunds of indirect taxes effectively act 
as export subsidies to foreign exporters; and 
(B) United States exporters are subject to 
double taxation, by paying direct taxes on do-
mestic production in the United States and hav-
ing their exported product or service face a bor-
der tax in the importing country consisting of 
indirect taxes. 
(5) Foreign governments paid their producers 
an estimated $254.3 billion of VAT rebates on goods 
exported to the United States. Foreign governments 
collected from United States producers an estimated 
$143.7 billion of VAT equivalent taxes on their im-
ported goods. For services, foreign governments paid 
their producers an estimated $48.2 billion of VAT 
equivalent taxes on services exported to the United 
States and collected from United States producers 
an estimated $72.3 billion of VAT equivalent taxes 
on services imported from the United States. The 
combined goods and services disadvantage in 2008 
was $518.4 billion. 
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