I had blogged about the digital services tax impacting the large technology companies like Google, Netflix, Amazon and the like and the impending possibilities here and here.
News coming out that this is likely to escalate was widely reported here, here and here.
The intentions of the US were pretty clear when Robert Lighthizer made statements at the Ways and Means Committee hearing recently stating that US tech companies should not be targeted.
Which forum will the dispute unwind itself to? Will it lead to unilateral hike in tariffs on champagne and handbags from Europe? WIll it be a consultation request at the WTO? Will it be an investment claim under a Bilateral Investment treaty? Or will it just be plain bilateral negotiations and hard bargaining?
Of course, these trade dilemmas do not hurt long standing security and strategic partnerships between the largest economies. That is a different set of agenda points.
News coming out that this is likely to escalate was widely reported here, here and here.
The United States has shocked Europe by pulling out of negotiations over an international digital tax and threatened to retaliate if the region moves ahead with plans on its own.
A number of European countries were hoping to impose taxes on digital companies above a certain revenue threshold, which would hit mainly U.S. tech firms given their size.
However, according to the Financial Times, in a letter to France, Italy, Spain and the U.K., the U.S. said international talks had reached an impasse and there wasn’t even room for an interim deal. The move effectively ends any chance of a deal soon.
The intentions of the US were pretty clear when Robert Lighthizer made statements at the Ways and Means Committee hearing recently stating that US tech companies should not be targeted.
Which forum will the dispute unwind itself to? Will it lead to unilateral hike in tariffs on champagne and handbags from Europe? WIll it be a consultation request at the WTO? Will it be an investment claim under a Bilateral Investment treaty? Or will it just be plain bilateral negotiations and hard bargaining?
Of course, these trade dilemmas do not hurt long standing security and strategic partnerships between the largest economies. That is a different set of agenda points.
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