Foreign sales corporation
Foreign sales corporation: FSC. A corporation established and maintained in a foreign country responsible for the export, sale and lease of goods and services produced in the United States. In this way, it may benefit from some tax exemptions and special administrative pricing rules. An FSC need not be affiliated with or controlled by a United States corporation to qualify for the benefits, but the benefits are greatest if such a relationship exists. Accordingly, most FSCs are subsidiaries of United States corporations. The FSC scheme was introduced in the early 1980s as the successor to the domestic international sales corporation (DISC) after a GATT panel ruled in 1976 that DISC was inconsistent with GATT rules. In 1998 the European Communities requested the establishment of a WTO panel because in its view the United States provisions for FSCs constituted a subsidy and that, accordingly, the United States had violated its obligations under the Agreement on Subsidies and Countervailing Measures. The panel found against the United States. Following an appeal by the United States, the Appellate Body ruled that the FSC constituted a prohibited subsidy under this Agreement on Subsidies and Countervailing Duties and under the Agreement on Agriculture. It asked the United States to withdraw the FSC provisions by 1 October 2001.
Source: http://ctrc.sice.oas.org/trc/WTO/Documents/Dictionary%20of%20trade%20%20policy%20terms.pdf
Web site to visit: http://ctrc.sice.oas.org
Author of the text: W. Goode
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