Now U.S. officials have found a new angle of attack: European digital taxes, specifically France’s. The French are about to impose a 3% levy on sales made in the country by tech companies with more than 750 million euros ($845 million) of global revenue. The likes of Alphabet Inc.’s Google and Apple Inc. have been up in arms about what they describe as an unfair tariff on Silicon Valley. And now they’ve been joined by their government, which is starting a probe of the French tax under Section 301 of the U.S. Trade Act, alleging harm against American interests. [...]
While the French initiative certainly has flaws, Paris is also being singled out for political and tactical reasons. Several other countries are introducing a digital tax too, and France would happily ditch its levy in favor of an OECD solution. What’s really motivating Trump’s team is the chance to drive a wedge between the French president Emmanuel Macron and his euro zone partners. Germany has held back from introducing a tech tax of its own, no doubt fearful of U.S. retaliation, while Ireland – whose low corporate tax rates are a magnet for tech giants – has fought hard against the idea. [...]
Zaki Laidi, an international relations professor at Sciences Po in Paris, has called for a “Euro-Pacific Partnership,” bringing together Canada, the EU, and the remaining countries in the Trans-Pacific Partnership. This would support the WTO (which is under siege by the Americans), comply with the Paris climate accords, and reform dispute settlement procedures rather than rip them up. As for tech, an EU or OECD agreement on digital taxes would make more sense than messy national solutions – and would avoid Trump’s opportunistic singling out of individual victims.
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