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US vows 100% tariffs on French cheese, champagne, luxury goods over digital tax

A cheese display inside Beaufils cheesemonger in Paris, France on March 27, 2019.
A cheese display inside Beaufils cheesemonger in Paris, France on March 27, 2019. Charles Platiau, Reuters

The US government on Monday said it may slap punitive duties of up to 100 percent on $2.4 billion in imports of French Champagne, handbags, cheese and other products, after concluding that France's new digital services tax would harm US tech companies.

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The US Trade Representative's office said its "Section 301" investigation found that the French tax was "inconsistent with prevailing principles of international tax policy, and is unusually burdensome for affected US companies", including Alphabet Inc's Google, Facebook Inc, Apple Inc and Amazon.com Inc.

US Trade Representative Robert Lighthizer said the US government was also exploring whether to open similar investigations into the digital services taxes of Austria, Italy and Turkey.

"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."

The trade agency said it would collect public comments on its proposed tariff list through January 14 and hold a public hearing on January 7. It did not specify an effective date for the proposed 100 percent duties.

The list targets some products that were spared from 25 percent tariffs imposed by the United States over disputed aircraft subsidies, including sparkling wines, handbags and make-up preparations - products that would hit French luxury goods giant LVMH and cosmetics maker L'Oréal hard.

The findings won favor from US lawmakers and US tech industry groups.

"The French digital services tax is unreasonable, protectionist and discriminatory," Senators Charles Grassley and Ron Wyden, the top Republican and Democrat, respectively, on the Senate Finance Committee, said in a joint statement.

French government ministers said on Tuesday that France and the EU are ready to fight back over the latest US tariff threats.

French finance minister 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 junior economy minister 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.

EU to respond ‘as one’

The EU also confirmed its commitment to backing France up should the proposed new tariffs be Implemented.
"As in all other trade-related matters the EU will act and react as one and it will remain united," EU Commission spokesman Daniel Rosario said.

The EU Commission, which handles trade matters for the EU's 28 member states, was "coordinating closely with the French authorities on next steps", he said.

He also encouraged dialogue, noting that Washington had left several options open including taking the fight to the World Trade Organisation in Geneva.

"We remain of the view that the WTO is the place to address any trade dispute (so) the EU will therefore seek immediate discussion with the US on how to solve this issue."

France’s 3 percent levy applies to revenue from digital services earned by firms with more than €25 million ($27.86 million) in French revenue and 750 million euros ($830 million) worldwide.

(FRANCE 24 with REUTERS)

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