ABSTRACT
This chapter begins with an overview of the nature of the problem, the so-called initiation phase. It examines the relationship existing among the withholding tax, the Eurobond market, the Netherlands Antilles treaty and its use by U. S. corporations and foreign investors. The chapter also examines the issue of macro-economic policy coordination between the U. S. and its major trading partners since the setting up of the Bretton Woods system. It describes the reasons why U. S. borrowers desired to maintain their access to the Eurobond market through the repeal of the withholding tax. Congress's desire to mitigate the impact of the repeal on the Netherlands Antilles' (NA) economy by maintaining the tax-exempt status of outstanding NA-issued bonds constituted a notable exception to this prevalence of domestic over foreign concerns. The chapter concludes that the repeal has most likely contributed to the lengthening of the maturity of U. S. government debt, which from the point of view of Treasury is certainly positive.
