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France calls for EU response if new US duties come into effect

The United States proposal to slap duties on French products in response to a tax on giant technology firms is "unacceptable," French Economy Minister Bruno Le Maire said on Tuesday.

Paris, 3 December 2019 (dpa/MIA) – The United States proposal to slap duties on French products in response to a tax on giant technology firms is “unacceptable,” French Economy Minister Bruno Le Maire said on Tuesday.

France had contacted the European Commission to confirm that if the new duties came into effect, there would be “a European response, a strong response,” Le Maire told Radio Classique.

Washington on Monday said that France’s 3 per cent tax on the local turnover of digital giants discriminated against US firms.

US Trade Representative Robert Lighthizer’s office proposed duties of up to 100 per cent on French products – including champagne, cheese and handbags – to a trade value of some 2.4 billion dollars.

The proposal is open for public comment until January, and the office said it was also considering whether to investigate digital services taxes in Austria, Italy, and Turkey.

Le Maire said he had told Lighthizer that the French tax simply aimed at “re-establishing fair taxation” and applied to European as well as US firms.

Big digital companies should not be paying “10 or 20 percentage points” less tax than small businesses, he said.

The French tax applies to the French digital services turnover of companies with a total digital turnover of at least 750 million euros (831 million dollars) worldwide and 25 million euros in France.

Le Maire has previously admitted that most, but not all, of the 30 or so big firms hit by the new French tax are from the US.

The issue is likely to come up when President Emmanuel Macron meets his US counterpart Donald Trump in London on Tuesday afternoon ahead of a summit of the NATO military alliance.

Le Maire said the US should now make it clear whether it still backed moves at the Organisation for Economic Cooperation and Development (OECD) to reach an international agreement on taxing digital services.

“If they say yes, then there is no problem, all the difficulties are solved,” he said – but, he argued, if the US no longer backed the OECD project, it would be going back on an agreement that Trump and Macron reached in August.

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