The office of the USTR (US Trade Representative) issued a notice of action announcing sanctions in the form of additional duties on a number of French products, due to come into effect on 06 January 2021 in retaliation to France’s digital service tax. The application of the sanctions is not immediate in order to allow additional time for further negotiations that could lead to a resolution of the dispute. The decision by the USTR follows the conclusions of an investigation that found the tax discriminatory against US companies.
The French products impacted, including cosmetics and handbags, have an estimated trade value of approximately USD 1.3 billion. In January, the US administration threatened to impose sanctions on French goods worth USD 2.4 billion in annual trade, but the two countries agreed a diplomatic truce and this refocused attention on efforts led by the OECD to find a common international solution to taxation for multinational companies.
In mid-June, the US decided to withdraw from the OECD-led negotiations, saying the talks had reached an "impasse." French economy minister Bruno Le Maire condemned the move, calling it a “provocation” at a time when a deal was within reach.
The CCIA (Computer & Communications Industry Association) lobby group described this latest announcement by the USTR as “a strong message” sent to countries that have implemented or are considering taxation penalising the US tech sector.
