WRITTEN QUESTION E-2554/01 by Salvador Garriga Polledo (PPE-DE) to the Commission. EU's waiving of demands for the United States to be penalised in the Foreign Sales Corporation case.
Date: 2001-09-19
Institutions: European Parliament, Provisional data
Subjects: Dispute Settlement Body, European Union, United States, fine, international sanctions

6.6.2002

EN

Official Journal of the European Communities

C 134 E/47

Part of that process is the consideration of existing and new instruments and tools for the provision of
information, including the sending of personalised letters. More direct communication with citizens about
the Union and its policies will help to bridge the current information gap and it will enhance people’s
understanding of the Union.

There will also be an evaluation of all aspects of the euro campaign, including direct communication with
the public. This evaluation will clearly influence the conduct of future information campaigns.

(1) COM(2001) 354 final.

(2002/C 134 E/049)

WRITTEN QUESTION E-2554/01

by Salvador Garriga Polledo (PPE-DE) to the Commission

(19 September 2001)

Subject: EU’s waiving of demands for the United States to be penalised in the Foreign Sales Corporation

case

The World Trade Organisation has ruled in favour of the European arguments against the multimillion FSC
(Foreign Sales Corporation) programme for the second time in less than two years.

The WTO considers this scheme to be incompatible with its rules and is obliging Washington to rectify the
situation.

Given that the EU previously threatened to demand a penalty of at least $ 4 billion if the WTO backed its
arguments, will the Commission demand payment of that penalty, make a smaller claim or simply waive
its demand by means of an agreement which is satisfactory for both sides?

Answer given by Mr Lamy on behalf of the Commission

(5 November 2001)

In October 1999, a Panel of the World Trade Organisation (WTO) ruled that the United States (US) tax
treatment for ‘Foreign Sales Corporations’ (FSC) is incompatible with WTO provisions. In February 2000,
the WTO Appellate Body confirmed the Panel ruling.

In September 2000, the Community and the US concluded a procedural agreement for the handling of this
case.

This agreement provides the following:

8 The Community will launch an ‘expedited’ WTO panel procedure, which may include an appeal to the

WTO Appellate Body, to examine the WTO compatibility of the FSC replacement legislation.

8 The Community will also request an authorisation from the WTO Dispute Settlement Body (DSB) to
adopt countermeasures in the form of suspension of concessions against the US indicating the amount
of countermeasures and the preliminary list of US products on which sanctions will be imposed. In
case the US objects to the level of countermeasures requested by the Community, the matter will be
referred to WTO arbitration. However, the arbitration procedure will be suspended until the expedited
WTO panel procedure is concluded.

8 The Community will not impose countermeasures on the US unless the FSC replacement legislation is

condemned by the WTO.

C 134 E/48

Official Journal of the European Communities

EN

6.6.2002

On 17 November 2000, the Community presented to the WTO both the request for suspension of
concessions and the request for consultations as the first step in the panel procedure. The WTO panel
ruled on 20 August 2001 condemning the FSC replacement legislation. On 15 October 2001 the US, as is
its right under relevant WTO provisions, appealed this ruling before the WTO Appellate Body. The
Appellate Body is expected to rule within 90 days from the date of the appeal.

the end of

the panel procedure,

the arbitration procedure examining whether the amount of
At
countermeasures requested by the Community is appropriate will be automatically reactivated.
It is,
therefore, for the WTO arbitrators to fix the amount of the countermeasures the EC can finally impose on
i.e. $ 4 000
the US which cannot be higher than the amount initially requested by the Community,
millions.

In light of the above, it can be clearly seen that the Commission has not waived any rights under the
WTO. As said before, the WTO Appellate Body will review the panel ruling and, if the ruling is confirmed,
the final amount of countermeasures the Community might be entitled to will be fixed by the arbitrators.
However, the Commission continues to expect that the US will comply with the WTO rulings.

(2002/C 134 E/050)

WRITTEN QUESTION E-2561/01

by Michiel van Hulten (PSE) to the Commission

(20 September 2001)

Subject: Problems detected in connection with implementation of the ESF during the periods 1994-1996

and 1996-1999

Could the Commission indicate the number of irregularities detected in connection with the use of
1.
ESF funds, together with the relevant amounts, for each Member State,
in respect of the 1994-1996
programming period? Have steps been taken in each of these cases to recover the money? If not, why not?

2. With regard to the cases referred to under 1 above, has the Commission produced an extrapolation,
on the basis of irregularities detected, for the whole of the programming period 1994-1996, or does it
intend to do so? If so, how many cases are concerned, and in which Member States? What is the size, in
each instance, of the sample on the basis of which an extrapolation has been made? What amounts have
been sought to be recovered? Which Member States are concerned? Have the amounts sought to be
recovered actually been paid back to the Commission?

3. With regard to the cases referred to under 1 above, has the Commission made proposals to the
Member States in respect of an arrangement? If so, in which cases? And on the basis of what criteria?

4.
Has the Commission detected irregularities which have not led to a claim for recovery in respect of
the Member State concerned? If so, could the Commission indicate the cases concerned, for each Member
State, and the amounts involved?

5.
Does the Commission take the view that, with the exception of the cases where steps have been
taken to recover funds, all ESF projects carried out during the period 1994-1996 were carried out to the
letter of the rules in force?

Could the Commission also reply separately to the above questions in respect of the 1996-1999

6.
programming period?

Answer given by Mrs Diamantopoulou on behalf of the Commission

(6 November 2001)

1.
Irregularities in the implementation of the European Social Fund (ESF), which co-financed many
thousand of projects all over the Community to the tune of on average € 7 000 million a year in the
period 1994-1999, are found in all Member States. Corrective actions are prepared in partnership with the