WASHINGTON -- Today, global tech trade association ITI released the following reaction to the Office of the U.S. Trade Representative’s (USTR) announcement that it will launch Section 301 investigations into digital services taxation measures adopted or under consideration in Austria, Brazil, the Czech Republic, the European Union, India, Indonesia, Italy, Spain, Turkey, and the United Kingdom.

“The digitalization of global business raises important questions about longstanding principles of international taxation,” ITI President and CEO Jason Oxman said. “It is critical that countries around the world cooperate to address these questions, and we continue to support the ongoing, multilateral discussions at the OECD as the best forum to do so. Despite these efforts, an increasing number of governments continue to introduce unilateral measures that undermine their commitments to the OECD project and contribute to the fragmentation of the global tax system. While these are exceptionally challenging times globally for individuals, governments, and businesses, the national measures introduced in recent months are increasingly broad in scope, presenting direct new challenges to firms small and large that do business online and operate across borders.”

“While we hoped to avoid further escalation of tensions, increasingly-expansive unilateral tax measures have necessitated a stronger response,” Oxman continued. “ITI continues to support the U.S. government’s efforts to investigate these complex trade issues. We urge the United States to pursue these 301 investigations in a spirit of international cooperation and with a view to advancing constructive engagement in the global negotiations on digital taxation. We also again call on countries that have enacted or are considering unilateral actions to withdraw individual measures and recommit to the ongoing, multilateral OECD process.”

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.

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