A response… in six months. The Trump administration announced Friday retaliatory measures targeting French products worth $ 1.3 billion to punish Paris for having imposed a tax on American tech giants but, in the midst of the coronavirus crisis, froze their application to allow to find a negotiated solution to the conflict.
"The office of the United States Trade Representative today decided to impose additional customs duties of 25% on French products with a commercial value of $ 1.3 billion in response to the adoption by France of 'a digital services tax that unfairly targets US digital technology companies,' said Robert Lighthizer's services. Additional customs duties will be imposed on cosmetic products and handbags. But they spare other emblematic products such as champagne, camembert or Roquefort.
Cordial agreement
In addition, "in order to allow more time to try to resolve this dispute, in particular through ongoing discussions within the Organization for Economic Co-operation and Development (OECD), and in recognition of the agreement of the France to delay the collection of its tax until the end of the year, the trade representative has decided to suspend the application of these additional customs duties for 180 days ", according to the American administration.
The French Parliament had definitively adopted on July 11, 2019 the introduction of a tax on digital giants, making France a pioneer country in the taxation of "Gafa" (acronym for Google, Amazon, Facebook and Apple) and other multinationals accused of tax evasion.
The day before, the United States had decided to launch a survey to measure the effects of such a tax on American businesses. And the White House host, who took aggressive tariff action against his allies and rivals, had threatened 100% tariffs on French products, including cheeses, cosmetics and handbags .
An "unreasonable" Gafa tax
The investigation by the office of the United States Trade Representative (USTR) was completed in January and concluded that the tax was "unreasonable" and discriminatory against American businesses. It was followed by a period of comments and requests for exemptions for certain goods, which has therefore just ended.
The president of the lobby of companies in the sector, Matt Schruers said in a statement that "today's action sends the strong message that discriminatory taxes targeting American companies are not a way to modernize international taxation".
In autumn 2019, the file seemed to be on the way to a diplomatic resolution.
The draft agreement then planned to leave in place the new French tax on the activity of large technology groups until the entry into force of a new international tax plan negotiated within the framework of the OECD.
On Friday, the International Monetary Fund urged an international agreement to resolve this conflict. "It is very important to avoid trade wars, it is important to avoid tax wars," said Vitor Gaspar, director of the tax affairs department of the International Monetary Fund in an interview with AFP.
- Gafa
- Economy