05-7143. WTO Dispute Settlement Proceeding Regarding the American JOBS Creation Act of 2004

AGENCY:

Office of the United States Trade Representative.

ACTION:

Notice; request for comments.

SUMMARY:

The Office of the United States Trade Representative (“USTR”) is providing notice that the Dispute Settlement Body (“DSB”) of the World Trade Organization (“WTO”) has established at the request of the European Communities (“EC”) a dispute settlement panel under the Marrakesh Agreement Establishing the World Trade Organization (“WTO Agreement”). That request may be found at http://www.wto.org contained in a document designated as WT/DS108/29. USTR invites written comments from the public concerning the issues raised in this dispute.

DATES:

Although USTR will accept any comments received during the course of the dispute settlement proceedings, comments should be submitted on or before May 2, 2005, to be assured of timely consideration by USTR.

ADDRESSES:

Comments should be submitted (i) electronically, to [e-mail], Attn: “JOBS Act (DS108)” in the subject line, or (ii) by fax, to Sandy McKinzy, at 202-395-3640. For documents sent by fax, USTR requests that the submitter provide a confirmation copy to the electronic mail address listed above.

FOR FURTHER INFORMATION CONTACT:

William D. Hunter, Associate General Counsel, Office of the United States Trade Representative, 600 17th Street, NW., Washington, DC 20508, [phone].

SUPPLEMENTARY INFORMATION:

USTR is providing notice that the DSB has established, at the request of the EC, a dispute settlement panel pursuant to the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes (“DSU”). The individual panelists are currently being selected. That panel will hold its meetings in Geneva, Switzerland, and would be expected to issue a report on its findings and recommendations within 90 days after its members have been appointed.

Major Issues Raised by the EC

On February 17, 2005, the DSB established at the EC's request a dispute settlement panel pursuant to Articles 6 and 21.5 of the DSU, Article 4 of the Agreement on Subsidies and Countervailing Measures (“SCM Agreement”), Article 19 of the Agreement on Agriculture, and Article XXIII of the General Agreement on Tariffs and Trade 1994 (“GATT 1994”) with respect to the American JOBS Creation Act of 2004 (“the JOBS Act”). According to the EC, the JOBS Act, which was enacted on October 22, 2004, was intended to implement the recommendations and rulings of the WTO Dispute Settlement Body in case WT/DS108 (United States—Tax Treatment for “Foreign Sales Corporations” and United States—Tax Treatment for “Foreign Sales Corporations”—Recourse to Article 21.5 of the DSU by the European Communities), but fails to do so properly and is inconsistent with the same provisions of the WTO Agreement as was the predecessor legislation.

In particular, the EC considers that Section 101 of the JOBS Act contains transitional provisions that will allow U.S. exporters to continue to benefit from the FSC Replacement and Extraterritorial Income Exclusion Act as follows: (a) In the years 2005 and 2006 with respect to all export transactions; and (b) for an indefinite period with respect to certain contracts. According to the EC, this results in a failure to withdraw the subsidy and implement the DSB's recommendations and rulings. The EC considers that the United States has failed to withdraw the subsidies as required by Article 4.7 of the SCM Agreement and has failed to implement the DSB's recommendations and rulings as required by Articles 19.1 and 21.1 of the DSU. The EC also considers that the United States continues to violate Articles 3.1(a) and 3.2 of the SCM Agreement, Articles 10.1, 8 and 3.3 of the Agreement on Agriculture and Article III:4 of the GATT 1994.

Public Comment: Requirements for Submissions

Interested persons are invited to submit written comments concerning the issues raised in this dispute. Persons may submit their comments either (i) electronically, to [e-mail], Attn: “JOBS Act (DS108)” in the subject line, or (ii) by fax to Sandy McKinzy, at 202-395-3640. For documents sent by fax, USTR requests that the submitter provide a confirmation copy to the electronic mail address listed above.

USTR encourages the submission of documents in Adobe PDF format, as attachments to an electronic mail. Interested persons who make submissions by electronic mail should not provide separate cover letters; information that might appear in a cover letter should be included in the submission itself. Similarly, to the extent possible, any attachments to the submission should be included in the same file as the submission itself, and not as separate files.

Comments must be in English. A person requesting that information contained in a comment submitted by that person be treated as confidential business information must certify that such information is business confidential and would not customarily be released to the public by the submitter. Confidential business information must be clearly designated as such and the submission must be marked “BUSINESS CONFIDENTIAL” at the top and bottom of the cover page and each succeeding page.

Information or advice contained in a comment submitted, other than business confidential information, may be determined by USTR to be confidential in accordance with section 135(g)(2) of the Trade Act of 1974 (19 U.S.C. 2155(g)(2)). If the submitter believes that information or advice may qualify as such, the submitter—

(1) Must clearly so designate the information or advice;

(2) Must clearly mark the material as “SUBMITTED IN CONFIDENCE” at the top and bottom of the cover page and each succeeding page; and

(3) Is encouraged to provide a non-confidential summary of the information or advice.

Pursuant to section 127(e) of the URAA (19 U.S.C. 3537(e)), USTR will maintain a file on this dispute settlement proceeding, accessible to the public, in the USTR Reading Room, which is located at 1724 F Street, NW., Washington, DC 20508. The public file will include non-confidential comments received by USTR from the public with respect to the dispute; if a dispute settlement panel is convened, the U.S. submissions to that panel, the submissions, or non-confidential summaries of submissions, to the panel received from other participants in the dispute, as well as the report of the panel; and, if applicable, the report of the Appellate Body. An appointment to review the public file (Docket WTO/DS108, JOBS Act dispute) may be made by calling the USTR Reading Room at [phone]. The USTR Reading Room is open to the public from 9:30 a.m. to noon and 1 p.m. to 4 p.m., Monday through Friday.

Daniel E. Brinza,

Assistant United States Trade Representative for Monitoring and Enforcement.