By Josh Zumbrun in Washington and Noemie Bisserbe in Paris
The Trump administration proposed tariffs of up to 100% against
$2.4 billion of French imports, saying the nation's new
digital-services tax unfairly targets U.S. tech companies such as
Apple Inc. and Alphabet Inc.'s Google unit.
The French tax, which was signed into law July 24, applies a 3%
tax on revenue that tech companies reap in France from such
activities as undertaking targeted advertising or running a digital
marketplace.
In an investigation released late Monday, the U.S. Trade
Representative's office said the Digital Services Tax, or DST,
applies largely to services where U.S. companies are dominant and
doesn't tax services where French companies are more
successful.
"Statements by French officials responsible for proposing and
enacting the French DST show that the law deliberately targets U.S.
companies," the USTR's office said. It added that French officials
"repeatedly referred to the French DST as the 'GAFA tax,' which
stands for Google, Apple, Facebook and Amazon."
In a statement, U.S. Trade Representative Robert Lighthizer said
the U.S. action "sends a clear signal that the United States will
take action against digital tax regimes that discriminate or
otherwise impose undue burdens on U.S. companies."
The USTR also threatened that such tariffs could be enacted in
the future against Austria, Italy and Turkey, all of which also
have digital-services taxes.
The USTR said it would hold public hearings on proposed tariffs
Jan. 7 and would accept public comments through at least Jan. 14
before moving forward with the levies. The action came on the same
day President Trump said he would raise tariffs on steel and
aluminum imports from Brazil and Argentina.
A spokesman for the French finance ministry declined to comment
late Monday.
French Finance Minister Bruno Le Maire said Monday, before the
USTR report was released, that the U.S. was backtracking from
previously announced plans to seek a solution through the
Organization for Economic Cooperation and Development, which
includes both the U.S. and France.
"They are now telling us that they don't want this solution and
are simply going to impose new sanctions on France," Mr. Le Maire
said on a radio broadcast. "My message is clear: We will never,
never, never abandon our will to tax fairly tech giants," he
added.
France's digital tax measure is the first in a series of
proposed national taxes on digital services being debated across
Europe. French lawmakers approved the new tax in July, just hours
after Mr. Lighthizer said his office would investigate it.
The $2.4 billion in imports potentially threatened with tariffs
is slightly less than 5% of the $52 billion worth of goods imported
from France in 2018.
Items subject to the tax would include wine, cheese, handbags
and porcelain, according to a list of 63 different tariff codes
released by the USTR's office.
Members of the Organization for Economic Cooperation and
Development, including most of the world's high-income nations,
have been negotiating a new framework for taxes on digital
services. France had pledged to repeal its new tax once an
agreement is reached at the OECD, but progress has been slow.
Sens. Chuck Grassley (R., Iowa) and Ron Wyden (D., Ore.), the
ranking members on the Finance Committee applauded the move,
signaling support from Congress on the action.
"The French digital services tax is unreasonable, protectionist
and discriminatory," the senators said, adding that they encourage
countries "considering similar actions to work within the OECD
framework toward a comprehensive solution."
In addition to tech giants such as Google and Apple, the digital
services tax would also hit Groupon Inc., eBay Inc., Match Group
Inc. (which operates Tinder) and Expedia Group, according to the
USTR's report.
Outside the U.S., companies subject to the tax would include
China's Alibaba Group Holding Ltd., Japan's Rakuten Inc. and
Randstad Holding NV, the report said.
The tariff action against France uses the same broad law that
the U.S. has used to impose tariffs against China.
The French tax is retroactive to the beginning of 2019.
In August, President Emmanuel Macron said U.S. and French
officials had agreed on a proposal stipulating that France will
reimburse U.S. tech companies if they end up paying more taxes
under the French tax than they would under taxation rules that the
OECD is currently negotiating.
Katherine Stech in Washington contributed to this article.
Write to Josh Zumbrun at Josh.Zumbrun@wsj.com and Noemie
Bisserbe at noemie.bisserbe@wsj.com
(END) Dow Jones Newswires
December 02, 2019 20:00 ET (01:00 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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