France and the EU are ready to fight back against US tariff threats on French products, French government ministers said yesterday.
The US on Monday threatened to impose tariffs of up to 100 percent on US$2.4 billion in French goods in retaliation for a digital services tax it says is discriminatory.
French Minister of Finance Bruno Le Maire described the US proposals as “unacceptable.”
“In case of new American sanctions, the European Union would be ready to riposte,” Le Maire told Radio Classique.
French Secretary of State for Economy and Finance Agnes Pannier-Runacher told Sud Radio that France would be “pugnacious” in its dealings with the US on the matter, and that France would not back down on its digital tax plans.
French sparkling wine, yogurt and Roquefort cheese are on the list of goods that could be targeted as soon as mid-January after a report from the US Trade Representative’s (USTR) office found that the digital tax penalizes US tech companies such as Google, Apple Inc, Facebook Inc and Amazon.com Inc.
France’s 3 percent levy applies to revenue from digital services earned by firms with more than 25 million euros ($27.7 million) in French revenue and 750 million euros worldwide.
The decision “sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on US companies,” US Trade Representative Robert Lighthizer said in a statement.
Washington was also considering widening the investigation to look into similar taxes in Austria, Italy and Turkey, Lighthizer said.
“The USTR is focused on countering the growing protectionism of EU member states, which unfairly targets US companies, whether through digital services taxes or other efforts that target leading US digital services companies,” he said.
The announcement came just hours before US President Donald Trump was due to meet French President Emmanuel Macron on the sidelines of the NATO summit in London yesterday.
The USTR report “concluded that France’s Digital Services Tax (DST) discriminates against US companies, is inconsistent with prevailing principles of international tax policy, and is unusually burdensome for affected US companies.”
Industry groups welcomed the report, with the Information Technology and Innovation Foundation saying in a statement that France’s tax is “narrowly and inappropriately targeted to raise revenue only from the largest companies in a small set of industries, many of them American.”
While applauding the USTR investigation, the Information Technology Industry Council’s vice president of policy Jennifer McCloskey said that the group would prefer to avoid “a strong trade response.”
“We respectfully urge the United States, France, and all participating governments to focus on a successful and lasting tax policy resolution” at the Organization for Economic Cooperation and Development (OECD), she said in a statement.
In an interview on Monday prior to the USTR announcement, Le Maire accused Washington of losing interest in such a deal.
“Having demanded an international solution from the OECD, it [Washington] now isn’t sure it wants one,” Le Maire told France Inter radio. “We can see that the United States is shifting into reverse.”
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