WASHINGTON – Today, ITI, the global voice of the tech sector, released the following reaction to the Office of the U.S. Trade Representative’s (USTR) announcement that it will launch a Section 301 investigation into France’s proposed digital services tax. The announcement comes ahead of the anticipated vote of France’s Sénat on the legislation on Thursday, July 11.
“The digitization of global business is raising important questions about longstanding principles of international taxation. It is critical that countries around the world cooperate to address these questions, and the ongoing OECD discussions are a promising example of the international collaboration that is necessary to resolve these issues fairly and thoughtfully. The decision by France – and other countries – to unilaterally advance a national digital services tax is a significant and concerning departure from that important multilateral effort,” said Jennifer McCloskey, ITI’s Vice President of Policy.
“While we had hoped escalation of this issue could be avoided, we now recognize that countries affected by France’s measure need to take stronger action in order to persuade France and others to refrain from unilateral measures and recommit to the OECD discussions. We support the U.S. government’s efforts to investigate these complex trade issues but urge it to pursue the 301 investigation in a spirit of international cooperation and without using tariffs as a remedy. We also again call on France and other countries considering unilateral actions to withdraw individual measures and recommit to the ongoing, multilateral OECD process,” McCloskey continued.
Sections 301-310 of the Trade Act of 1974, commonly referred to as Section 301, provide USTR with legal authority to seek to enforce trade agreements, resolve trade disputes, and open foreign markets to U.S. goods and services. Once the U.S. government initiates a Section 301 investigation, USTR seeks a negotiated settlement with the country concerned. Absent agreement on an acceptable solution, and where a country’s obligations under a trade agreement are implicated, the law requires that USTR bring a formal dispute under that trade agreement. In other instances, Section 301 provides USTR with the authority to impose trade sanctions on economies that it deems to be implementing unfair trade practices. Prior to the creation of the WTO dispute settlement mechanism in 1995, USTR used this broad, unilateral enforcement mechanism extensively to address trade barriers and enforce trade agreements.