Roth Statement at FSC Mark Up
WASHINGTON -- The Senate Finance Committee met today to mark up H.R. 4986, the FSC Repeal and Extraterritorial Income Exclusion Act of 2000. Senate Finance Committee Chairman William V. Roth, Jr. (R-DE) delivered the following opening statement:
"Today, the Committee will consider H.R. 4986, The 'FSC Repeal and Extraterritorial Income Exclusion Act of 2000,' which the House of Representatives overwhelmingly approved in a bipartisan vote of 315 to 109. This legislation satisfies the United States' WTO obligations and ensures that U.S. companies will compete on a level playing field in the global marketplace.
"I don't believe it is necessary to go through the extended history of the dispute between the United States and the European Union over the differences between U.S. and European tax systems and their impact under the GATT and WTO rules. Suffice it to say that the EU chose to abrogate the understanding we had reached in 1981 to resolve a prior dispute on these issues and filed a complaint with the WTO.
"The complaint alleged that the current foreign sales corporation provisions of the Internal Revenue Code did not comply with WTO rules, including the Agreement on Subsidies and Countervailing Measures. A WTO dispute panel agreed with the EU and its ruling was affirmed by the WTO Appellate Body.
"Unlike the European approach to compliance with their WTO obligations in the beef and banana cases, this legislation before us represents a good faith attempt to comply with the panel's ruling. The Chairman's mark withdraws the current FSC provisions and, in their place, makes fundamental adjustments to the Internal Revenue Code that incorporate territorial features akin to those of several European tax systems. The bill not only addresses the specific concerns raised by the WTO panel, it also takes into account the comments received from the EU in the course of consultations over the last six months.
"In adopting this approach, the bill also marks a first step toward addressing concerns raised before this Committee in hearings I held on the need for changes in the international provisions of the Code generally. That is an issue we will return to in the next Congress.
"In the meantime, however, I want to stress the need to pass this bill. Failure to do so could result in the imposition of retaliatory duties against American exports to the European Union. Under the WTO rules, the EU will have the right to retaliate against U.S. exports as of October 1 unless replacement legislation is in effect. While I understand that there are discussions under way with the EU that are designed to structure any future dispute settlement actions regarding these issues, they are predicated entirely on the passage of this bill.
"As a consequence, failure to enact this legislation would prove costly for the American worker, the American farmer, and for American business. For that reason, the bill has broad bi-partisan support in both Houses of Congress and the Administration. It is, in fact, the product of an extremely cooperative and constructive effort by the Congress and the Administration. Deputy Treasury Secretary Eizenstat is with us today, and will describe the Administration's support of this bill. I hope this bill receives solid support from this Committee, and I look forward to continuing to work in a bipartisan manner to ensure that this bill is signed into law."
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