France renews call for Washington agreement with OECD

France renews call for Washington agreement with OECD

While the United States threatens France with further reprisals, Paris believes that an agreement at the OECD on digital taxation constitutes the “only way out from the top”.

Bruno Le Maire at the National Assembly on April 17, 2020

An OECD agreement on digital taxation is the “only way out from the top” to the dispute between Washington and Paris, said this Saturday the entourage of the Minister of Economy Bruno Le Maire.

“The only way out from above is an agreement with the OECD,” insisted the source, after the announcement the day before of further reprisals by the United States. These measures, however frozen immediately, target French products representing $ 1.3 billion, to punish Paris for having introduced a tax that applies to American technology giants.

Bruno Le Maire met “lengthily” Friday on the phone with the American chief trade negotiator, Robert Lighthizer, and the secretary of the Treasury Steven Mnuchin, added his entourage, without giving more details on the content of the discussions.

Cosmetic products and handbags affected

By Friday evening, by announcing these new retaliatory measures, the administration of President Donald Trump had frozen their application for six months to allow for a negotiated solution to the conflict that has plagued Franco-American relations for many months.

Additional customs duties will be imposed on cosmetic products and handbags, but they will save other emblematic products such as champagne, camembert or Roquefort.

The French Parliament had definitively adopted on July 11, 2019 the introduction of a tax on the digital giants, making France a pioneer country in the taxation of “Gafa” (acronym for Google, Amazon, Facebook and Apple) and other multinationals accused of tax evasion.

“Unreasonable” and discriminatory tax

The office of the United States Trade Representative (USTR) concluded earlier this year that the tax was “unreasonable” and discriminatory against American businesses. In autumn 2019, the file seemed to be on the way to a diplomatic resolution.

The draft agreement then planned to leave in place the new French tax on the activity of large technology groups until the entry into force of a new international tax plan negotiated within the framework of the OECD. The overhaul of international taxation, under the aegis of the OECD, aims to better understand the activities of companies in this sector whose substantial profits escape many tax authorities around the world. But these multilateral discussions have so far failed.

On June 17, taking note of the lack of progress on the file, Steven Mnuchin had announced a pause in the discussions, arousing the disapproval of the partner countries and the fear of France to be imposed customs tariffs on flagship products like wine. The International Monetary Fund on Friday urged an international agreement to resolve the conflict.


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