The Trump administration announced Friday, July 10, retaliatory measures against French products representing $ 1.3 billion (about 1.15 billion euros) to punish Paris for having imposed a tax on American technology giants – so-called “GAFA” tax (acronym for Google, Amazon, Facebook and Apple) – but froze their application to allow a negotiated resolution to the conflict to be found.
"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 'digital services tax that unfairly targets US digital technology companies', said the services of Robert Lighthizer.
Additional customs duties will be imposed on cosmetic products and handbags. But they spare other emblematic products such as champagne, camembert or Roquefort.
In addition, "In order to allow more time to try to resolve this dispute, in particular by means of ongoing discussions within the Organization for Economic Cooperation and Development (OECD), and in recognition of France's agreement to delay the collection of his tax until the end of the year, the trade representative decided to suspend the application of these additional customs duties for 180 days ", according to the United States administration.
An "unreasonable" and discriminatory tax
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" 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 measures against his allies and rivals, had threatened 100% tariffs on French products, including cheeses, cosmetics and handbags .
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 US companies. It was followed by a period of comments and requests for exemptions for certain goods, which has therefore just ended.
Industry lobby president Matt Schruers said in a statement that "Today's action sends a strong message that discriminatory taxes targeting American businesses are not a way to modernize international taxation".
A diplomatic resolution in an impasse
In the fall of 2019, the matter appeared to be on the road 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.
The overhaul of international taxation, under the aegis of the OECD, aims to better understand the activities of companies in this sector whose substantial profits escape many tax authorities around the world. But these multilateral discussions have so far failed.
On June 17, noting the lack of progress on the file, the American Secretary of the Treasury, Steven Mnuchin, had announced a pause in the discussions, arousing the disapproval of the partner countries and the fear of France to be imposed customs tariffs on flagship products such as wine.
The International Monetary Fund on Friday urged an international agreement to resolve the 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 Agence France-Presse.
"An agreement would be very important (…) for the world economy", he added, stressing that minimizing tax evasion was a priority tool in the future, available to states to find new sources of income and reduce their public debt.
He stressed that the approach undertaken within the framework of the OECD was "Very important in that there is a perception that extremely profitable and globally successful companies are not paying their fair share in taxation".
"There is the perception that the system of international taxation which was negotiated in the framework of the League of Nations about 100 years ago is no longer suited to its purpose", he continued.
