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A sales tax or value added taxes tax consumption by the residents of the country which imposes it, but not the residents of other countries. So disallowing the cost of imports for tax purposes would violate World Trade Organization rules as well as most other free trade agreements signed by the United States.The WTO dispute resolution system is now very sophisticated in meting out punishment to flagrant violators. A procedure for settling disputes existed under the old GATT, but it had no fixed timetables, rulings were easier to block, and many cases dragged on for a long time inconclusively.

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