The US Congress plans to repeal the extraterritorial income (El) provisions during 2004. Such a measure is now before both houses of Congress. The World Trade Organization had previously declared these E1 provisions were illegal, and had called for the US to repeal those provisions.
The intended repeal of the extraterritorial income provisions would not eliminate all US export tax incentives, but would leave exporters of US products with just one export boost, the Domestic International Sales Corporations (DISC) provisions. The US trading partners successfully challenged DISC 20 years ago by applying the General Agreement on Tariffs and Trade procedures, specifically the 1979 Tokyo Round. That challenge did not lead to an outright DISC repeal, but to its curtailment.
1. New DISCs
US Congress severely reduced the impact of the DISC provisions, truncating DISCs established after the GATT, challenge, by imposing two limitations: