Bush Administration To Appeal WTO Tax Ruling Against U.S.

By John S. McClenahen Citing support from business executives and members of Congress, U.S. Trade Rep. Robert B. Zoellick will appeal a recent World Trade Organization (WTO) ruling on a provision of U.S. tax law that benefits American exporters. At issue are so-called foreign sales corporations, which, in effect, allow U.S. companies to exclude foreign-source income from tax. Although U.S. tax law was changed last year in an attempt to meet objections from the 15-nation European Union (EU), the EU challenged the changes and on Aug. 20 a WTO panel said the changes constituted an unfair subsidy. "We have decided to appeal because we believe the decision was in error," says Zoellick. "We have discussed our concerns with the EU, with which we'll continue to seek to cooperate to manage, and, ultimately, resolve this dispute."

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