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The Office of the U.S. Trade Representative (USTR) has issued a <a href="https://ustr.gov/about-us/policy-offices/press-office/press-releases/2019/july/ustr-announces-initiation-section-301" target="_blank" rel="noopener">press release</a> announcing the initiation of an investigation under Section 301 of the Trade Act of 1974 into the French government&rsquo;s planned Digital Services Tax (DST). On March 6, 2019, France released a proposal for a 3 percent levy on revenues that certain companies generate by providing certain digital services to, or aimed at, French users. On June 26, 2019, a joint committee of the two houses of the French Parliament agreed to a joint committee DST bill. On July 4, the French National Assembly passed the DST bill. The French Senate is expected to take up, and pass, the bill on July 11, 2019. According to the USTR, the French DST, if passed, would apply only to companies with total annual revenues from the covered digital services of at least &euro;750 million globally and &euro;25 million in France.
&ldquo;The United States is very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies,&rdquo; USTR Robert Lighthizer said. In response, President Donald Trump directed the USTR to determine whether the tax would be &ldquo;discriminatory or unreasonable and burdens or restricts United States commerce&rdquo; under the provisions of Section 301.
The USTR has issued a <a href="https://ustr.gov/sites/default/files/enforcement/301Investigations/Initiation_of_Section_301_Investigation.pdf" target="_blank" rel="noopener">Federal Register notice</a> providing background information on the DST and the implementation of the Section 301 investigation.
The USTR will hold a public hearing on the matter on August 19, 2019. Interested parties wishing to testify at the hearing must submit a request to appear, along with a written version of the oral testimony, no later than August 12, 2019. All other written comments must be submitted to USTR by August 19, 2019, with any post-hearing comments filed by August 26, 2019. The USTR has established a formal docket for this investigation: USTR-2019-0009. Written comments and requests to appear must be filed on this docket via the Federal eRulemaking Portal, <a href="http://www.regulations.gov" target="_blank" rel="noopener">http://www.regulations.gov</a>.
In particular, the USTR is seeking comments as to:
<ul>
<li>Concerns with the DST, as set out in the joint committee bill or as subsequently modified or adopted by the French government;</li>
<li>Whether the DST is unreasonable or discriminatory;</li>
<li>The extent to which the DST burdens or restricts U.S. commerce;</li>
<li>Whether the DST is inconsistent with France&rsquo;s obligations under the WTO Agreement or any other international agreement; and</li>
<li>The determinations required, including what action, if any, should be taken.</li>
</ul>
The Senate Finance Committee&rsquo;s Chairman and Ranking Minority Member, Chuck Grassley and Ron Wyden, respectively, issued a <a href="https://www.finance.senate.gov/chairmans-news/grassley-wyden-applaud-ustr-investigation-of-french-digital-services-tax-proposal" target="_blank" rel="noopener">joint statement</a> &ldquo;applauding&rdquo; the USTR for initiating the investigation and stating that &ldquo;the digital services tax that France and other European countries are pursuing is clearly protectionist and unfairly targets American companies in a way that will cost U.S. jobs and harm American workers.&rdquo;

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USTR Announces Section 301 Investigation into France’s Digital Services Tax