France Promises EU Retaliation After U.S. Trade Threats -- Update
03 December 2019 - 10:06PM
Dow Jones News
By Noemie Bisserbe
PARIS -- French Finance Minister Bruno Le Maire said the
European Union would strike back against the U.S. if President
Trump follows through on a plan to impose tariffs on French
imports, in what could develop into a trans-Atlantic tit-for-tat on
trade.
On Monday, the Trump administration proposed tariffs of up to
100% against $2.4 billion of French imports -- ranging from cheese
and wine to handbags and porcelain -- saying the nation's new
digital-services tax unfairly targets U.S. tech companies such as
Apple Inc. and Alphabet Inc.'s Google unit.
Mr. Trump, in a news conference in London on Tuesday, said "They
are American companies, I don't want France taxing American
companies."
The $2.4 billion in imports threatened with tariffs is slightly
less than 5% of the $52 billion worth of goods imported from France
in 2018.
Mr. Le Maire said the U.S. tariff threats were unacceptable.
Speaking on French radio Tuesday, Mr. Le Maire said if America went
ahead, "The European Union would be ready to retaliate."
The European Commission, the EU's executive arm, didn't
immediately respond to requests for comment.
The latest spat over trade comes as President Trump is in Europe
for a NATO summit and criticized French President Emmanuel Macron's
recent comments about the military alliance.
In an interview with the Economist, Mr. Macron warned that
Europe was experiencing "the brain death of NATO" and renewed his
call for the continent to bolster its own military capabilities.
Mr. Trump on Tuesday said Mr. Macron's statement was "very
insulting" and that he could see France breaking off from the
alliance. Mr. Trump added that "nobody needs NATO more than the
French, the one who benefits the least is the U.S."
The new tariff threats risk further escalating trade tensions
between Europe and the U.S. already strained by the Trump
administration's decision last year to hit the bloc with steel and
aluminum duties, and to impose tariffs this year on $7.5 billion in
aircraft, food products and other goods from the EU.
President Trump's tariff proposal also raises pressure on
members of the Organization for Economic Cooperation and
Development, including most of the world's high-income nations, to
agree on a new international framework for taxes on digital
services as part of a global debate on how to tax the growing
internet economy.
France had pledged to repeal its new tax -- introduced in July
-- once an agreement is reached at the OECD, but progress has been
slow.
The Trump administration is worried the tax -- known as the DST
-- is discriminatory and a burden on U.S. commerce.
"People take advantage of American companies, if anyone is going
to take advantage of our companies it's us," Mr. Trump said on
Tuesday.
Mr. Le Maire said OECD members had come up with a good proposal
that took into account U.S. concerns and that they were waiting for
a response from the Trump administration. He called on the U.S. to
honor its commitment in August, during a Group of Seven summit in
Biarritz, to work with OECD members to develop a new tax framework
for tech giants.
France's digital tax measure is the first in a series of
proposed national taxes on digital services being debated across
Europe. French lawmakers approved the new tax in the summer, just
hours after U.S. Trade Representative Robert Lighthizer said his
office would investigate it under the same broad law the Trump
administration relied on for its trade conflict with China.
In an investigation report released late Monday, the Mr.
Lighthizer's office said the DST applies largely to services where
U.S. companies are dominant and doesn't tax services where French
companies are more successful.
The French tax applies a 3% levy on revenue that big tech
companies reap in France from such activities as undertaking
targeted advertising or running a digital marketplace.
In August, President Emmanuel Macron said U.S. and French
officials had agreed on a proposal stipulating that France will
reimburse U.S. tech companies if they end up paying more taxes
under the French tax than they would under taxation rules that the
OECD is currently negotiating.
Emre Peker in Brussels contributed to this article
Write to Noemie Bisserbe at noemie.bisserbe@wsj.com
(END) Dow Jones Newswires
December 03, 2019 05:51 ET (10:51 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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