Number: RL30684
Title: The Foreign Sales Corporation (FSC) Tax Benefit for Exporting: WTO Issues and Economic Analysis
Authors: David L. Brumbaugh, Government and Finance Division 
Abstract: The reason for the pending legislation that would alter the current tax code's FSC provisions is FSC's difficulties with the WTO. U.S. trading partners in the EU have argued that FSC is an export subsidy in violation of the WTO agreements, and in 1999 a WTO panel supported those claims. This report looks a U.S. tax laws and how they relate to the WTO agreements. It then looks at DISC's problems with the General Agreement on Tariffs and Trade and how FSC was designed to address challenges under GATT. The report then turns to the current WTO dispute and describes H.R. 4986: the proposed replacement for FSC that was passed by the U.S. House of Representatives on September 14, 2000.
Pages: 24
Date: Updated December 11, 2000