October 03,2005

Baucus Comments on WTO Ruling on U.S. Tax Law

(WASHINGTON, D.C.) U.S. Senator Max Baucus, ranking member of the Senate FinanceCommittee, issued the following statement on the recent WTO ruling in a case brought by theEuropean Union (EU) against certain transitional provisions of the American Jobs Creation Act(the “Jobs Act”):

“I am disappointed with the WTO panel’s decision and urge the United States TradeRepresentative to appeal this case to the WTO Appellate Body.

“But I am even more disappointed that the EU decided to bring this case in the first place. Iworked for two years with Chairman Grassley and our Senate colleagues to pass the Jobs Act toaddress the concerns raised by the EU and the WTO with the foreign sales corporation taxregime.

“Passing the Jobs Act was an enormous effort. But rather than welcome the changes to U.S. lawwe made in the Jobs Act, the EU instead filed suit. They challenged the limited transition reliefthe Act affords U.S. companies whose long-term tax planning was disrupted by the repeal of theFSC/ETI regime. And they challenged provisions that seek to avoid upsetting decades-longcontractual relationships. Transition provisions more generous than those in the Jobs Act areroutine in cases involving major changes to complex domestic legislation.

“The EU benefited itself from similar transition provisions in the past. But it could not resist thetemptation to seek some advantage over the United States in an unrelated WTO case involvingcivil aircraft. Linking the two dispute settlement cases as the EU has done sets a dangerousprecedent. The United States is unlikely to reopen the Jobs Act. The EU’s stance will severelychallenge the ability of the United States and European Union to work together toward asuccessful Doha Round of WTO negotiations.”