EU Rejects U.S.' Foreign Sales Corps.; Welcomes More Talks

The 15-nation European Union (EU), not surprisingly, is rejecting the Clinton Administration's first effort to continue a major foreign-sales tax break for U.S. corporations. The World Trade Organization, acting on a complaint filed by the EU, in February ruled that so-called Foreign Sales Corporations (FSCs) are export subsidies in violation of international trading rules. The U.S. reworked the FSCs and presented its proposal for their replacement on May 2. On the eve of the Memorial Day weekend, Pascal Lamy, the EU trade commissioner, informed Stuart Eizenstat, deputy secretary of the U.S. Treasury, that the EU had problems with the proposal's export provisions. However, Lamy stressed that the EU is willing to talk "in order to find a definitive and timely solution." If an agreement cannot be reached, the U.S. will have to close down FSCs by Oct. 1.