With the European Union and other countries adopting or considering “Digital Services Taxes,” National Association of Beverage Importers urged the U.S. Trade Representative not to impose additional duties on “wine, distilled spirits, and beer, or other goods.
“This approach is the most consistent with the guideposts of (1) implementing trade remedies that will obtain the elimination of the measures of a foreign country deemed to be discriminatory, unreasonable, unfair, or inequitable and burdens or restricts U.S. commerce and (2) avoiding a disproportionate adverse effect on United States stakeholders including small and medium businesses and consumers,” Robert M. Tobiassen, president, wrote in a comment letter filed yesterday.
USTR recently opened Section 301 investigations of Digital Services Tax (DST) adopted or being considered by Austria, Brazil, Czech Republic, European Union, India, Indonesia, Italy, Spain, Turkey, and the United Kingdom.
Last year, USTR determined that the DST adopted by France discriminates against United States businesses and is not consistent with norms of accepted taxation policies. The recently initiated investigations expand the USTR agenda on DSTs that USTR believes target large United States tech companies.
“Imported wines and distilled spirits have paid their dues in the trade war with Europe” Tobiassen said, “and should not be collateral damage in yet another trade dispute, especially one that deals with services. Moreover, USTR is now proposing to expand the retaliatory tariffs to beer, gin, and vodka in the Airbus dispute that will only cause more harm to American importers, jobs, and consumers.”
Tobiassen noted that tariffs amounting to 38% of trade volume in value haven’t accomplished the intended purpose of bringing the EU to the negotiating table in the Airbus dispute.
“Simply raising the retaliatory tariffs or adding new goods will not result in your desired aim because they impact the manufacturing industries in Europe which already has appealed to their respective governments to resolve the dispute,” Tobiassen wrote. “Rather, you need to reorient the trade remedies to focus on services in order to be effective.”
There are multiple principles and precedents in trade disputes for limiting trade remedies to the same sector as that of the underlying violation, nullification, or impartment was found, Tobiassen said, adding:
“DST is a service and not a good. So go after those companies from the EU and other DST-taxing jurisdictions, including banking, financial transactions, insurance, and services related to foreign investment, among others, in the United States. By focusing the trade sanctions on other business categories, more specifically services, the business voices in Europe and the other countries calling on their trade authorities to seek a resolution of the dispute is expanded beyond the agriculture and manufacturing industries.
“Trade remedies applied to services,” said Tobiassen “would do less harm to small and medium sized businesses and consumers in the United States. Applying the trade remedies to services poses far less, if any, of a financial burden on these American businesses, particularly as many of them continue to bear the burden of retaliatory tariffs in the Airbus dispute and suffer adverse domestic market losses due to the COVID-19 crisis.”
“We urge USTR not to propose additional duties wine, distilled spirits, beer and malt beverages, or other goods; rather, we respectfully submit that the appropriate trade remedy is a charge or fee on services in the United States by companies in the named jurisdictions” Tobiassen concluded.