UNITED STATES – TAX TREATMENT FOR "FOREIGN SALES CORPORATIONS"
Document: Recourse by the European Communities to Article 4.10 of the SCM Agreement and Article 22.2 of the DSU
Date: 17 November 2000
Document codes: WT/DS108/13
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 by the European Communities to Article 4.10 of the SCM Agreement
and Article 22.2 of the DSU
The following communication, dated 17 November 2000, from the Permanent Delegation of
the European Commission to the Chairman of the Di spute Settlement Body, is circulated pursuant to
Article 4.10 of the SCM Agreement and Article 22.2 of the DSU.
The European Communities requests that a spec ial meeting of the Dispute Settlement Body
be held on 28 November 2000 to consider the following agenda item:

Recourse by the European Communities to Article 4.10 of the SCM Agreement and
Article 22.2 of the DSU.
On 8 October 1999, the Panel in this dispute found that the United States' "Foreign Sales
Corporations" scheme violated Article 3.1(a) of the Agreement on Subsidies and Countervailing
Measures (the "SCM Agreement") and Articl e 3.3 of the Agreement on Agriculture. On
24 February 2000, the Appellate Body confirmed the findings of the Panel with respect to the
violations of the SCM Agreement and modifi ed the findings concerning the Agreement on
Agriculture concluding that the Foreign Sales Corporations scheme violated Articles 10.1 and 8 of the
Agreement on Agriculture. On 20 March 2000, the Dispute Settlement Body (the "DSB") adopted the
Appellate Body report and the report of the Panel, as modified by the Appellate Body. The resulting
DSB recommendations and rulings include the recommendation that the United States bring its
measures found to be inconsistent with the SCM Agreement and the Agreement on Agriculture into
conformity with the provisions of those agreements , and that the United States withdraw the export
subsidies at the latest with effect from the 1 October 2000.
On 2 October 2000 the European Communities and the United States informed the DSB of
the "Agreed procedures under Articles 21 and 22 of the Dispute Settlement Understanding and Article
4 of the SCM Agreement applicable in the follow-up to the United States - Tax Treatment of "Foreign
Sales Corporations" WTO dispute" concluded between the parties on 29 September 2000. The
present request is drawn up in the light of this agreement.
On 12 October 2000, in a special session, the DSB agreed to the United States' request to
allow it a time period expiring on 1 November 2000 to implement the DSB recommendations and
rulings.
As the United States has failed to implement the DSB recommendations and rulings by
1 November 2000, and as envisaged in the agreed procedure mentioned above, the

European Communities hereby requests authorization from the DSB to take appropriate
countermeasures and to suspend concessions pursuant to Article 4.10 of the SCM Agreement and
Article 22.2 of the DSU in the amount of US$4043 million per year.
The European Communities intends to take countermeasures and suspension of concessions
in the form of the suspension of tariff concessions and related obligations under the GATT 1994 by
imposing an additional duty of 100 per cent ad valorem above bound custom duties on a final list of
US products drawn from the indicative list attached.

ANNEX
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chapters Description
1 Live animals
2 Meat and edible meat offal
4 Dairy produce; birds' eggs; natural honey; edible products of animal origin, not
elsewhere specified or included
5 Products of animal origin not elsewhere specified or included
7 Edible vegetables and certain roots and tubers
8 Edible fruit and nuts; peel of citrus fruits or melons
10 Cereals
11 Products of the milling industry; malt; starches; inulin; wheat gluten
12 Oil seeds and oleaginous fruits; miscellaneous grains, seeds and fruit; industrial or
medical plants; straw and fodder
15 Animal or vegetable fats and oils and their cleavage products; prepared edible fats;
animal or vegetable waxes
16 Preparations of meat, fish or crustaceans, molluscs or other aquatic invertebrates
17 Sugars and sugar confectionery
19 Preparations of cereals, flour, starch or milk; pastrycooks' products
20 Preparations of vegetables, fruit, nuts or other parts of plants
21 Miscellaneous edible preparations
23 Residues and waste from the food i ndustries; prepared animal fodder
33 Essential oils and resinoids; perfumery, cosmetic or toilet preparations
34 Soaps, organic surface-active agents, washing preparations, lubricating preparations,
artificial waxes, prepared waxes, polishing or souring preparations, candles and similar
articles, modeling pastes, "dental waxes" and dental preparations with a basis of plaster
35 Albuminous substances; modified starches; glues; enzymes
41 Hides and skins (other than furskins) and leather
42 Articles of leather; saddlery and harness; travel goods, handbags and similar containers;
articles of animal gut (other than silkworm gut)
43 Furskins and artificial fur; articles thereof
44 Wood and articles of wood; wood charcoal
48 Paper and paperboard; articles of paper pulp, paper or paperboard
49 Books, newspapers, pictures and other products of the printing industry; manuscripts,
typescripts and plans
51 Wool, fine and coarse animal hair; yarn and fabrics of horsehair
52 Cotton
54 Man-made filaments
57 Carpets and other textile floor coverings
61 Articles of apparel and clothing accessories, knitted or crocheted

CN
chapters Description
62 Articles of apparel and clothing accessories, not knitted or crocheted
63 Other made up textile articles; sets; worn clothing and worn textile articles; rags
64 Footwear, gaiters and the like; parts of such articles
69 Ceramic products
70 Glass and glassware
71 Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad
with precious metal, and articles thereof; imitation jewellery; coins
72 Iron and steel
73 Articles of iron or steel
74 Copper and articles thereof
76 Aluminium and articles thereof
82 Tools, implements, cutlery, spoons and forks, of base metal; parts thereof of base metal
83 Miscellaneous articles of base metal
84 Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof
85 Electrical machinery and equipment and parts thereof; sound recorders and reproducers,
television image and sound recorders and reproducers, and parts and accessories of such
articles
88 Aircraft, spacecraft, and parts thereof
95 Toys, games and sports requisites; parts and accessories thereof