Wall Street Journal | November 15, 2001
WASHINGTON -- The U.S. will not concede its position on a disputed tax law that has come under fire from the European Union, even if the World Trade Organization rules against the provision again later this month, a senior Treasury official said Thursday.
The WTO's dispute settlement body will hear arguments Nov. 26 in the U.S. appeal of an August decision against the provision known as foreign sales corporation laws. The WTO ruled Aug. 20 that recent changes to U.S. tax laws didn't alter the rule's unfair subsidy to U.S. exporters, giving them a competitive edge.
"If that decision is adverse to the United States, the next step will be the resumption of arbitration over the measure of damages and authorization of retaliation, which is expected to take approximately 60 to 90 days or until approximately April of 2002," said Mark Weinberger, Treasury's assistant secretary for tax policy, in prepared remarks for a speech at the Tax Foundation's annual conference.
U.S. exporters stand to lose about $4 billion a year if the tax breaks are eliminated. The U.S. has argued that the law is neither a subsidy nor export-contingent. Weinberger called it "a measure for the avoidance of double taxation."
"This is not the only matter between the United States and the European Union and an issue of this magnitude needs to be resolved in the context of a larger relationship," Weinberger said. "This case is too big to leave solely to litigation to resolve. We need to pursue a multifaceted approach."
Weinberger voiced support for the latest efforts to assemble a bipartisan economic stimulus package in the Senate after a Democratic-led bill faltered.
"Senate Republicans were right to reject a bad spending bill that wasn't stimulative," Weinberger said. "Centrists have made a proposal that moves away from the big-spending approach. We are willing to work day and night with Finance Committee and Ways and Means Committee members to get a bipartisan package that is truly stimulative as soon as possible."
Weinberger said Treasury was working internationally to find ways to boost global economic growth. He also urged caution on any new proposals for taxing e-commerce without international consensus and sound technological footing.
(The story that ran around 3:25 p.m. EST (2025 GMT) included a phrase mischaracterizing Treasury's approach toward U.S. taxation strategies. Weinberger said the U.S. does not have a "purely worldwide system" of taxation.)
-By Rebecca Christie, Dow Jones Newswires; 202 862 9249; rebecca.christie@dowjones.comWall Street Journal:
