William Chou


During the decade-long relationship between the United States and the World Trade Organization (WTO), perhaps no controversy has fomented as long and bitterly as the dispute over the U.S. tax benefits for exporters. This article analyzes two competing bills before the House of Representatives, both devised to bring the United States in compliance with the WTO's ruling against the U.S. Foreign Sale Corporation (FSC) and Exterritorial Income (ETI) tax regimes as prohibited export subsidies. Hit with a $4 billion retaliatory tariff by the European Union, the House sought new tax legislation that would preserve at least some of the tax benefits exporters have enjoyed since 1971. The competition between these bills did not cut neatly across party lines; it reflected bipartisan ideological differences that pitted legislators of the same party against one another on how the revenues from the FSC/ETI repeal should be allocated.