UNITED STATES – TAX TREATMENT FOR "FOREIGN SALES CORPORATIONS"
Document: Second Recourse to Article 21.5 of the DSU by the European Communities Notification of an Other Appeal by the European Communities under Article 16.4 and Article 17 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), and under Rule 23(1) of the Working Procedures for Appellate Review
Date: 30 November 2005
Document codes: WT/DS108/33
Complainant: EU
Respondent: U.S.
Third parties: Australia, Barbados, Brazil, Canada, China, India, Jamaica, Japan
Dispute stage: Retaliation & Arbitration
Agreements cited: Art. 1, 3, 8  AgricultureArt. 3.1(a), 3.1(b)  Subsidies and Countervailing Measures (SCM)Art. 9, 10  Agriculture

UNITED STATES – TAX TREATMENT FOR "FOREIGN SALES CORPORATIONS"

Second Recourse to Article 21.5 of the DSU by the European Communities

Notification of an Other Appeal by the European Communities
under Article 16.4 and Article 17 of the Understanding on Rules
and Procedures Governing the Settlement of Disputes (DSU),
and under Rule 23(1) of the Working Procedures for Appellate Review

 The following notification, dated 28 November 2005, from the Delegation of the European
Commission, is being circulated to Members.

Procedures for Appellate Review, the European Co mmunities submits its Notice of Other Appeal on
certain issues of law in the Report of the Panel on United States – Tax Treatment for “Foreign Sales
Corporations”: Second recourse to Article 21. 5 of the DSU by the European Communities
1 and
certain legal interpretations developed by the Panel.

2. The European Communities agrees with the Panel’s findings of continued violation and
inconsistency and its conclusion that there is a continuing failure to implement DSB recommendations
and rulings, as well as with the Panel’s rejection of the US procedural defences. However, if the
Appellate Body were to uphold any of the US clai ms on appeal, the European Communities considers
that it would become necessary for the Appellate Body to consider certain other issues in order to
resolve this dispute. For this reason, the Eur opean Communities requests the Appellate Body, in the
event that it should reverse any of the Panel’s findings, to consider the following claims:

(a) By not entirely withdrawing FSC and ETI subsidies, the United States has failed to
comply with its obligations under Article 4.7 of the SCM Agreement;2

(b) By not entirely withdrawing FSC and ETI subsidies and maintaining the less
favourable treatment of imported as compared to domestic products, the United States
has failed to comply with its obligations under Articles 19.1 and 21.1 of the DSU.3

3. Furthermore, for the case the Appellate Body considered that the Panel was in error in
concluding that no new recommenda tions under Article 4.7 of the SCM Agreement or Article 19.1 of
the DSU are needed, 4 the European Communities respectfully requests the Appellate Body to correct
the error and issue the necessary recommendations.

1 WT/DS 108/RW2, circulated on 30 September 2005.
2 Which the Panel did not address in its Report (see WT/DS108/29, 14 January 2005).
3 On which the Panel exercised judicial economy (see e.g. Panel Report, footnote 84).
4 See e.g. Panel Report, paras. 7.37-7.46, 7.49, 7.52-7.58, 8.2.

4. The European Communities considers that if the Appellate Body were to find that the Panel
had erred, this would mean that the Panel ha d not conducted its assessment of the matter in
accordance with Article 11 of the DSU and had not contributed to an effective resolution of the
dispute within the meaning of Article 3 of the DSU.