PARIS (AFP) – French President Emmanuel Macron and United States (US) President Donald Trump have agreed to extend negotiations on a dispute over a French tax on digital giants to the end of the year, postponing Washington’s threat of sanctions against Paris, French officials said yesterday.
French Finance Minister Bruno Le Maire, speaking before a Brussels meeting with EU counterparts, said: “Macron and Trump had a very constructive discussion… and they agreed to avoid all escalation between the US and France on this digital tax issue.”
A French diplomatic source said the French and US leaders, who spoke by telephone on Sunday, agreed to give negotiations a chance to “find a solution in an international framework” and avoid “a trade war that will benefit no one”.
Macron tweeted on Monday that he had had a “great discussion” with Trump on the issue. “We will work together on a good agreement to avoid tariff escalation,” he said.
“Excellent!” replied Trump on Twitter. The White House said the two men spoke and “agreed it is important to complete successful negotiations on the digital services tax, and they also discussed other bilateral issues.”
The dispute began last year when Paris approved a levy on up to three per cent of revenues earned by technology companies in France, as international efforts dragged on to find a new model for taxing revenues earned via online sales and advertising.
Tech companies often pay little tax in countries in which they are not physically present.
Washington said the tax singled out US companies such as Google, Apple, Facebook, Amazon and Netflix. It threatened retaliatory duties of up to 100 per cent of the value of French imports of such emblematic goods as Camembert cheese.
The European Union (EU) had said it would back France if such tariffs were levied, raising the prospect of a transatlantic trade war.
On January 7, Paris and Washington had given themselves 15 days to reach a deal to avert the US threat of duties on up to USD2.4 billion of French goods.
Le Maire, who has been conducting intensive negotiations for the last several weeks, held talks on the issue with US counterpart Steven Mnuchin at the World Economic Forum in Davos yesterday.
According to another French source, the possibility of France suspending collection of the tax “will be on the negotiating table”.
After confirming the reprieve, Le Maire told journalists in Brussels that he spoke with Mnuchin by telephone on Sunday and “our technical teams are in contact day and night to work on a solution”.
He stressed that “this remains a difficult negotiation…. A certain number of details need to be worked out, but I believe we’re going in the right direction.”
Le Maire declined, however, to say whether France would suspend its digital tax. “I am not going to get into the details of the negotiation. I prefer that remains between Mnuchin and myself,” he said.