E.U. Will Hit Back at America over 'Unacceptable' French Wine Tax, Warns Minister

The American proposal to enforce additional duties of up to 100 percent on French products such as wine and cheese in retaliation for a "discriminatory" tech tax law is "unacceptable," the country's economy and finance minister, Bruno Le Maire, said today.

In an interview with Radio Classique, Le Maire pushed back against the U.S. plan to apply fresh tariffs on French goods worth $2.4 billion in response to the Digital Services Tax (DST), designed to tax technology giants including Google, Apple, Facebook, and Amazon.

The minister said any U.S. sanctions would be met with a strong response from the European Union.

Translated, Le Maire told the radio station: "If there are any new American sanctions, the European Union will be ready to hit back. Yesterday we made contact with the European Commission for assurances that should there be any new sanctions, there would be a European response, a strong response."

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The politician also posted a statement to Twitter today alongside multiple clips from the interview. "The proposed U.S. sanctions are simply unacceptable," he wrote. "French taxation on the digital giants aims to restore fiscal justice.

He added: "It does not only target U.S. companies but also Chinese or European companies. A digital taxation project at the international level is on the table of the OECD [Organisation for Economic Co-operation and Development]. France said yes to this project."

"We are waiting for the American response," he continued. "If the United States says no, it means that they do not respect the commitment made at the end of August to the G7."

In a report this week, the Office of the U.S. Trade Representative said the French tech tax law "discriminates against U.S. digital companies" and is "unusually burdensome."

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The legislation, signed into law in July this year, imposes a 3 percent tax on digital services companies with global revenues of more than €750m ($830), of which at least €25m ($28m) is made in France. It retroactively applies to revenue generated since January 1, 2019.

Trump weighed in today during a meeting with NATO leaders in London, saying: "[France is] starting to tax other people's products so therefore we're going to tax them. That's just taking place right now, in technology, and we are doing their wines and everything else."

Yesterday, U.S. trade representative Robert E. Lighthizer said that additional duties of up to 100 percent on French products should be applied to "take into account the level of harm to the U.S. economy resulting from the DST." The list of potentially-impacted goods is long, but includes sparkling wine, beauty products, handbags, porcelain and a slew of cheeses.

"The USTR is focused on countering the growing protectionism of E.U. member states, which unfairly targets U.S. companies, whether through digital services taxes or other efforts that target leading U.S. digital services companies," Lighthizer said in a release yesterday.

He indicated new taxes may not be limited to France. "USTR's decision today sends a clear signal that the U.S. will take action against digital tax regimes that discriminate or otherwise impose undue burdens on U.S. companies," he noted. "Indeed, USTR is exploring whether to open... investigations into the digital services taxes of Austria, Italy, and Turkey."

Red wine
File photo: Red wine with charcuterie assortment in the background. iStock

The French tax law is expected to raise approximately €400m ($443) this year, the BBC reported. According to a KPMG fact-sheet, Le Maire previously told G7 members the digital services tax would only withdrawn or altered if a "credible decision" was made at the OECD-level.

It's not the first time French wine has been used as a bargaining chip. In July, president Trump voiced frustration at the introduction of the DST via his personal Twitter profile.

"France just put a digital tax on our great American technology companies. If anybody taxes them, it should be their home Country, the USA," he wrote. "We will announce a substantial reciprocal action on Macron's foolishness shortly. I've always said American wine is better than French wine!" The plan was called "completely moronic" by the French agriculture minister.

Google, Facebook, Apple and Amazon did not immediately respond to Newsweek's request for comment.

The graphic below, provided by Statista, shows trading levels between the United States and the biggest wine exporters in the EU throughout 2018.

Statista
E.U. Will Hit Back at America over 'Unacceptable' French Wine Tax, Warns Minister | News