By Andrea Shalal
WASHINGTON/PARIS (Reuters) -The United States has indefinitely suspended 25% tariffs on French cosmetics, handbags and other imports it had planned in retaliation for a digital services tax Washington says will harm U.S. tech firms, as it investigates similar taxes elsewhere.
The U.S. Trade Representative’s office (USTR) said on Thursday that the 25% tariffs on imports of the French goods, which are valued at around $1.3 billion annually, would be suspended indefinitely.
Washington announced the tariffs in July after concluding a French digital services tax (DST) would harm Google, Facebook, Apple, Amazon and other firms.
The USTR said suspending the action against France, which was due to begin on Jan. 6, would allow it to pursue a coordinated response in 10 investigations involving other countries, including India, Italy, Britain and Turkey.
“The U.S. Trade Representative has decided to suspend the tariffs in light of the ongoing investigation of similar DSTs adopted or under consideration in ten other jurisdictions,” the USTR said in a statement, adding it had not yet determined possible trade actions in those cases.
The agency said suspending the French tariffs would enable a “coordinated response in all of the ongoing DST investigations.”
French Finance Minister Bruno Le Maire said the tariffs would not have been “legitimate” under WTO rules and called for a global solution.
“Trade disputes between the United States and Europe… will only make losers, particularly during this time of crisis,” he said.
EU Trade Commissioner Valdis Dombrovskis noted the U.S. decision in a tweet and underscored Brussel’s willingness to work on a global solution for fair taxation of the sector.
“The EU stands ready to explore all options should the U.S. unilaterally apply these trade measures,” he said.
The U.S. Coalition of Service Industries said it hoped the reprieve would give President-elect Joe Biden and his nominee as trade czar, Katherine Tai, time to work with France and other countries and find a multilateral solution.
CSI President Christine Bliss also urged France and other countries named in the USTR investigation to suspend imposition of DSTs and continue work to resolve the issue.
The American Apparel & Footwear Association welcomed news that the threatened tariffs against France has been suspended, noting that threatened retaliation against the measure would have been damaging to U.S. handbags and had “nothing to do with this tax, or even with digital services.”
The USTR on Wednesday said it had found that digital services taxes adopted by India, Italy and Turkey also discriminated against U.S. companies and were inconsistent with international tax principles, but held off on announcing any specific tariff actions.
The probes are among several still-open USTR Section 301 investigations that could lead to tariffs before President Donald Trump leaves office or early in the incoming Biden administration.
(Reporting by Andrea Shalal, additional reporting by Philip Blenkinsop in Brussels and Leigh Thomas, Dominique Vidalon in Paris; Editing by Alexander Smith, Aurora Ellis and Steve Orlofsky)
