WRITTEN QUESTION P-0731/00 by Paul Coûteaux (UEN) to the Commission. FSCs ‐ Case before the WTO.
Date: 2000-03-06
Institutions: European Parliament, Provisional data
Subjects: Dispute Settlement Body, European Union, United States, World Trade Organisation, export tax, tax exemption, trade dispute

21.11.2000

EN

Official Journal of the European Communities

C 330 E/211

In response to the threat of proceedings by the Community, however, Korea proposed holding a third
round of discussions from 14 to 16 March to look for a way of avoiding a possible trade dispute. Finally,
on 29 March, Korea agreed to give virtually all the commitments the Commission had called for.

Should an agreement be reached in the near future, the Commission (cid:129) together with the Community
industry and the Member States (cid:129) would check very carefully that Korea was fulfilling its commitments. In
this context, the Commission could very quickly ask for consultations with Korea to find concrete
solutions to the difficulties facing our industry.

Should Korea fail to deliver on its commitments or should there be no real impact on the market, the
Community industry has said that it would lodge a complaint with the Commission (under the Trade
Barriers Regulation) regarding Korea(cid:146)s subsidy practices. If the complaint provided sufficient evidence, the
Commission would be prepared to initiate an investigation. This could end up before the WTO Dispute
Settlement Body, thus offering the EU the prospect of the practices being penalised.

(2000/C 330 E/245)

WRITTEN QUESTION P-0731/00

by Paul Coßteaux (UEN) to the Commission

(6 March 2000)

Subject: FSCs (cid:129) Case before the WTO

The WTO(cid:146)s appeal body has recently condemned the American system of FSCs (Foreign Sales Corpora-
tions) which enable exporters to avoid all tax by using fictitious bases in tax havens. This system of
avoiding export duties, currently legal in the USA, will therefore have to be dismantled (Report AB-1999-
9, 24 February 2000). However, it is unlikely that Congress will be inclined to comply with the WTO(cid:146)s
decision in the run-up to the election.

Can the Commission say whether,
if the USA does not abolish FSCs within the prescribed time limit
(before 30 September 2000), it proposes to implement sanctions of the same kind as those adopted by the
USA in connection with the Euro-American dispute over hormone-treated beef, in other words to impose
tit-for-tat trade restrictions?

Does the Commission intend to link these two cases in the context of wider negotiations on trans-Atlantic
trade disputes?

Answer given by Mr Lamy on behalf of the Commission

(29 March 2000)

The Commission is confident that the United States will comply with their international obligations
relating to Foreign Sales Corporations (FSC) and bring their legislation into line with the World Trade
Organisation (WTO) agreements before 1 October 2000. However, in the hypothetical case that the United
States should fail to bring the FSC laws into line with the conclusions of the panel and the appellate body
by this date, a number of options are open to the Community. These include negotiating compensation,
and suspending concessions granted to the US. These are rights enjoyed by any party that brings a
complaint before the WTO, should the obligations that result not be implemented as required, and are in
no way peculiar to the FSC case. However, the Commission expects that the United States will indeed
implement the recommendations made by the disputes settlement body of the WTO.

Concerning the second part of the question, the Commission has been working for some time now on the
case of hormone-treated beef. Given the specific importance of each of these two cases in its own right,
the Commission will endeavour to find an independent solution for each, in line with our international
obligations under the WTO agreements.