Cattlemen React to WTO Ruling

August 23, 2001

The National Cattlemen's Beef Association has indicated it will work to make sure U.S. policy is in line with World Trade Organization requirements in the wake of a WTO ruling against U.S. legislation on foreign sales corporations. The United States has until Oct. 19 to appeal the ruling, and U.S. Trade Representative Robert Zoellick has said he intends to do so.

In a ruling announced earlier this week, the WTO said legislation passed by Congress in November intended to bring the U.S. Tax Code's foreign sales corporation (FSC) program in line with international trade policy still discriminates in favor of U.S. goods in breach of WTO rules.

"NCBA will review the report released by the WTO compliance committee to determine specifically what provisions of the FSC Replacement Act of 2000 have been identified as not meeting U.S. obligations.

Regardless of the decision after the U.S. appeal, "NCBA will abide by its long standing policy support for the U.S. to meet all requirements necessary to keep the doors open to allow U.S. beef to be exported to foreign countries," the association said. "NCBA will continue to monitor international trade issues to ensure U.S. beef producers have fair and equal access to the markets of competing exporting countries. The overall goal of our involvement is to position America's cattle producers to be major exporters of beef products around the world while assuring that other countries do not have an unfair disproportionate access to the U.S. beef market."

Zoellick has said the United States will continue to work with Congress, U.S. companies and the European Union (EU) to find an acceptable solution to the tax dispute. "Our goal is to promote U.S. economic interests while at the same time, fulfilling our WTO obligations, and we believe we will be able to accomplish both," he said.

A FSC is an off-shore, foreign corporation that U.S. exporting companies establish, per the U.S. tax code, to manage revenues from foreign sales to minimize federal income tax. The debate between the U.S. and the EU over FSCs is one of several issues including the EU ban on U.S. beef that NCBA is working to resolve.

On Tuesday, REUTERS reported that no clear solution had emerged to the long-running problem, according to congressional and industry sources. The EU could begin the process of imposing sanctions of up to $4 billion against U.S. goods, an outcome neither side wants, according to the news agency.

Rep. Bill Thomas (R-CA), chairman of the House Ways and Means Committee, which has oversight of tax legislation, has called for a major overhaul of U.S. international tax law as the solution to the U.S.-EU trade dispute.