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Committee on Ways and Means
Subcommittee on Select Revenue Measures

For Immediate Release
Contact: Press Office 202-225-8933
June 11, 2002

WASHINGTON - This week, legislators will hold the third in a series of hearings on the recent rulings from the World Trade Organization (WTO). The subcommittee will explore potential adjustments to the corporate tax code in ways that promote the competitiveness of U.S. companies while respecting our international obligations under the WTO.

On January 14, 2002, the WTO Appellate Panel issued its report finding the United States’ Extraterritorial Income Exclusion Regime (ETI) to be a prohibited export subsidy. This marks the fourth time in the past two and one-half years that the United States has lost this issue, twice in the Foreign Sales Corporation case and now twice in the ETI case. There is no opportunity for the United States to appeal this latest determination.

On January 29, 2002, a WTO Arbitration Panel began proceedings to determine the amount of retaliatory trade sanctions that the European Union (EU) can impose against U.S. exports to the EU. The EU has requested $4.043 billion in sanctions. The United States has asserted that the proper measure of sanctions is no more than $1.1 billion. Originally expected on April 29, 2002, a decision by the panel is now expected by June 17, 2002.

Chairman Jim McCrery (R-LA), said, “It was clear from our first hearing that we cannot replicate the benefits of FSC/ETI. Our second hearing examined whether this dispute presents an opportunity to fundamentally reform the Tax Code. This hearing will explore a third possible response to the WTO’s ruling, namely making changes to the Tax Code to promote the international competitiveness of U.S. companies.”