The US had proposed tariffs on French goods worth $ 1.3 billion in retaliation for the French tax on technology companies.
The United States says it will withhold slaps on French cosmetics, handbags, and other imports in retaliation for a digital service tax (DST). Washington says this will hurt U.S. tech companies while they investigate similar taxes elsewhere.
The US Trade Representative’s Office (USTR) announced Thursday that the 25 percent import tariffs on French goods, valued at approximately $ 1.3 billion annually and due to come into effect on Wednesday, are indefinite get abandoned.
Washington announced the tariffs in July after a US investigation found a daylight saving time wrongly singled out US companies like Google, Facebook, Apple and Amazon.
France and other countries view digital service taxes as a way to increase revenue from the local operations of large tech companies that they say benefit hugely from local markets and make limited contributions to public coffers.
USTR said suspending action against France would allow Washington to pursue a coordinated response in 10 investigations into similar taxes in India, Italy, the UK and other countries. There was no time frame for further action.
European leaders and industry associations welcomed the news, saying it would allow more time to discuss a global tax solution to bear fruit.
“The US sales agent has decided to suspend tariffs amid the ongoing investigation into similar summer times that are being enacted or under review in ten other jurisdictions,” the agency said in a statement, adding that it did not yet have possible trade measures in the other cases set.
French Finance Minister Bruno Le Maire said the tariffs were by no means “legitimate” under World Trade Organization rules and redoubled his call for a global solution.
“Trade disputes between the United States and Europe … will only result in losers, especially at this time of crisis,” he said.
EU Trade Commissioner Valdis Dombrovskis emphasized the readiness of Brussels to work on a global solution for a fair taxation of the sector.
“The EU stands ready to examine all options if the US unilaterally applies these trade measures,” he said.
The respite gives US President-elect Joe Biden and his trade tsarina candidate Katherine Tai time to work with France and other countries to find a multilateral solution, Coalition of Services (CSI) Industries said.
CSI President Christine Bliss also called on France and other countries named in the USTR investigation to suspend the introduction of summer times and continue to work towards a solution.
Nearly 140 countries involved in talks agreed in October to continue negotiations through mid-2021 after discussions stalled when Washington was reluctant to join an international agreement ahead of the US presidential election last November.
The USTR said Wednesday that it found that taxes on digital services introduced by India, Italy and Turkey also discriminated against US businesses and were inconsistent with international tax rules, but it was reluctant to announce specific customs measures.
The investigations are among several active USTR investigations that could result in tariffs before President Donald Trump leaves office or at the start of the Biden administration.