By John S. McClenahen The U.S. now has until Nov. 1, less than a week before the presidential and congressional elections, to come up with an internationally acceptable substitute for "foreign sales corporations" (FSCs). Created in the 1980s, FSCs are ...
ByJohn S. McClenahen The U.S. now has until Nov. 1, less than a week before the presidential and congressional elections, to come up with an internationally acceptable substitute for "foreign sales corporations" (FSCs). Created in the 1980s, FSCs are a tax shelter that has allowed U.S. goods exporters to reduce income taxes on some foreign-source income. The World Trade Organization (WTO), acting on a complaint from the 15-nation European Union (EU) has ruled that FSCs are an illegal export subsidy under international trade rules. For a few months, the Clinton Administration and the U.S. Congress have been scrambling to come up with what they believe to be a legally acceptable substitute. The House has passed a measure, and legislative action is pending in the Senate. If the EU still finds fault, under terms of a U.S.-EU agreement made late last month and blessed by the WTO on Oct. 12, it will challenge the new legislation. And the effect, notes the Washington-based National Assn. of Manufacturers, will delay until mid-2001 sanctions against the U.S. that were originally slated to be imposed this past Oct. 1.
