UNITED STATES – TAX TREATMENT FOR "FOREIGN SALES CORPORATIONS"
Document: Recourse to Article 21.5 of the DSU by the European Communities Notification of an Appeal by the United States under paragraph 4 of Article 16 of the Understanding on Rules and Procedures Governing the Settlement of Disputes
Date: 15 October 2001
Document codes: WT/DS108/21
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"
Recourse to Article 21.5 of the DSU by the European Communities
Notification of an Appeal by the United States under paragraph 4
of Article 16 of the Understanding on Rules and Procedures
Governing the Settlement of Disputes
The following notification, dated 15 October 2001, sent by the Permanent Mission of the
United States to the Dispute Settlement Body ("DSB"), is circulated to Members. This notification
also constitutes the Notice of Appeal, filed on the sa me day with the Appellate Body, pursuant to the
Working Procedures for Appellate Review.
Pursuant to Article 16 of the Understanding on Rules and Procedures Governing the
Settlement of Disputes ("DSU") and Rule 20 of the Working Procedures for Appellate Review , the
United States hereby notifies its decision to appeal to the Appellate Body certain issues of law
covered in the Panel Report on –
Recourse to Article 21.5 of the DSU by the European Communities () and certain
legal interpretations developed by the Panel.
1. The United States seeks review by the Appellate Body of the Panel's findings that the FSC
Repeal and Extraterritorial Income Exclusion Act of 2000 ("ETI Act") involves export subsidies
prohibited by Article 3.1(a) of the Agreement on Subsidies and Countervailing Measures
("SCM Agreement"), and the corollary finding that the United States has acted inconsistently with its
obligation under Article 3.2 of the SCM Agreement. These findings are in error, and are based upon
erroneous findings on issues of law and on related legal interpretations with respect to various
provisions of the SCM Agreement and other covered agreements, including:
(a) the Panel's findings that the ETI Act's exclusion of extraterritorial income from tax
constitutes the foregoing of revenue that is otherwise due within the meaning of
Article 1.1(a)(1)(ii) of the SCM Agreement;
(b) the Panel's findings that the ETI Act's exclusion of extraterritorial income from tax is
contingent upon export performance within the meaning of Article 3.1(a) of the
SCM Agreement;
(c) the Panel's findings that the ETI Act's exclusion of extraterritorial income from tax is
not a measure to avoid the double taxation of foreign-source income within the
meaning of the fifth sentence of footnote 59 of the SCM Agreement, including the
Panel's finding that the responding party bears the burden of proof with respect to
establishing that the fifth sentence applies to that party's measure.
Should the Appellate Body reverse the Panel's finding referred to in paragraph 1(c), above, the United
States respectfully requests that the Appellate Body complete the Panel's analysis and find that the

ETI Act's exclusion of extraterritorial income from tax is not a prohibited subsidy by virtue of
footnote 5 of the SCM Agreement.
2. The United States seeks review by the Appellate Body of the Panel's findings and related
legal interpretations that the ETI Act is inconsistent with U.S. obligations under Articles 8 and 10.1 of
the Agreement on Agriculture.
3. The United States seeks review by the Appellate Body of the Panel's finding and related legal
interpretations that the ETI Act is inconsistent with Article III:4 of the General Agreement on Tariffs
and Trade 1994.
4. The United States seeks review by the Appellate Body of the Panel's finding and related legal
interpretations that the United States has not fully withdrawn the FSC subsidies found to be prohibited
export subsidies inconsistent with Article 3.1(a) of the SCM Agreement and has therefore failed to
implement the recommendations and rulings of the DSB made pursuant to Article 4.7 of the
SCM Agreement.