France, US set 2-week target for digital tax deal

[PARIS] Paris and Washington have set a two-week deadline to end a row over a French proposal to tax multinational tech giants, French Finance Minister Bruno Le Maire said on Tuesday.

President Donald Trump last month unveiled sky-high retaliatory duties on US$2.4 billion of French products from wines to leather handbags in response to the proposed tax that would hit US firms like Netflix and Amazon.

"We have given ourselves exactly 15 days" to settle the issue, Bruno Le Maire said.

The deadline coincides with a scheduled meeting on the topic at the World Economic Forum meeting in Davos from January 21 to 24, he said.

"In this period of discussion, France should not be hit by American sanctions," Mr Le Maire said a day after he spoke at length to US Treasury Secretary Steven Mnuchin by telephone.

"If there were to be American sanctions... we would bring the case to the WTO (World Trade Organization) and we will be ready to respond," Mr Le Maire said.

"We believe that the project of American sanctions against French digital taxation is at once unfriendly, inappropriate and illegitimate," he added.

Mr Le Maire was speaking at a meeting in Paris with European Union Trade Commissioner Phil Hogan, who expressed the bloc's support for France.

"We will look at all possibilities," Mr Hogan said.

"If any tariffs or measures are imposed by the United States, the European Commission will stand together with France and all other member states who wish to have the sovereign right to impose digital taxation on companies in a fair way," the Irish commissioner said.

Mr Hogan is to travel to Washington next week and meet US Trade Representative Robert Lighthizer.

Mr Lighthizer, who had invited written comments on the matter, is to hold a public gathering Tuesday to consider requests for tax exemptions.

France last year approved a levy on tech firms as international efforts dragged on to find a new model for taxing revenues earned via online sales and advertising.

Tech companies often pay little tax in countries in which they are not physically present.

AMERICANS WOULD 'SUFFER MORE'

The levy will see them paying up to three per cent of revenues earned in France.

Washington says US companies such as Google, Apple, Facebook, Netflix and Amazon have been singled out by the French tax, and threatened duties of up to 100 per cent of the value of French imports of such emblematic goods as Champagne and Camembert cheese.

On Monday, Mr Le Maire urged Washington to renounce the threatened sanctions and said his meeting with Hogan would "study the possibility of commercial retaliation."

"This trade war is in no one's interest and I call on our American friends to display wisdom, to return to their senses," Mr Le Maire told France Inter radio.

In Washington, French executives speaking on the sidelines of the trade representative's hearing told AFP on Tuesday that US retaliation would hurt their expansion plans and possibly lead to lay-offs.

Joanna Rosenberg, chief marketing officer for the Staub line of French cast-iron cookware, said her firm's plans to open a West Coast warehouse and expand its retail business would be affected.

Ms Rosenberg added: "American workers and consumers would suffer more from these tariffs than (the) French."

George J Kakaty, CEO and President of Bernardaud, a firm that sells Limoges porcelain, told AFP he wanted the tariffs dropped.

"If it does not happen, the consequences are severe, not only to our company but also to the retailers," he said.

Mr Kakaty said expansion plans were on hold and conceded the tariffs could "potentially" lead to layoffs at his 30-person company.

The French foreign minister called on the United States to seek a global solution, via negotiations underway at the Organisation for Economic Cooperation and Development, to the problem of firms paying little tax on massive revenue earned thanks to online platforms.

After blocking the OECD talks for several years, Washington relaunched them last year only to make proposals in December which France rejected.

France is already subject to US sanctions for subsidies to aircraft manufacturer Airbus.

AFP