[Federal Register Volume 84, Number 235 (Friday, December 6, 2019)]
[Notices]
[Pages 66956-66960]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-26325]
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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
[Docket No. USTR-2019-0009]
Notice of Determination and Request for Comments Concerning
Action Pursuant to Section 301: France's Digital Services Tax
AGENCY: Office of the United States Trade Representative.
ACTION: Notice of determination, request for comments, and notice of
public hearing.
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SUMMARY: The U.S. Trade Representative has determined that France's
Digital Services Tax is unreasonable or discriminatory and burdens or
restricts U.S. commerce. The U.S. Trade Representative proposes action
in the form of additional duties of up to 100 percent on products of
France to be drawn from the preliminary list in the Annex to this
notice. The Office of the United States Trade Representative (USTR)
seeks comments on this proposed action, as well as on other options
including the imposition of fees or restrictions on services of France.
The interagency Section 301 Committee will hold a public hearing in
connection with the action to be taken under Section 301.
DATES: To be assured of consideration, the following schedule applies:
December 30, 2019: Due date for submission of a request to appear
at the public hearing and a summary of testimony.
January 6, 2020: Due date for written comments.
January 7, 2020: The Section 301 Committee will convene a public
hearing in the main hearing room of the U.S. International Trade
Commission, 500 E Street SW, Washington, DC 20436 beginning at 9:30
a.m.
January 14, 2020: Due date for submission of post-hearing rebuttal
comments.
ADDRESSES: You should submit written comments through the Federal
eRulemaking Portal: http://www.regulations.gov. Follow the instructions
for submissions in sections V and VI below. The docket number is USTR-
2019-0009. For issues with on-line submissions, please contact the USTR
Section 301 line at (202) 395-5725.
FOR FURTHER INFORMATION CONTACT: For procedural questions concerning
the submission of written comments or participating in the public
hearing, please contact the USTR Section 301 line at (202) 395-5725.
For questions concerning the investigation, please
[[Page 66957]]
contact Kate Hadley, Assistant General Counsel at (202) 395-4959,
Robert Tanner, Director, Services and Investment at (202) 395-6125, or
Michael Rogers, Director, Europe and the Middle East at (202) 395-2684.
SUPPLEMENTARY INFORMATION:
I. Proceedings in the Investigation
On March 6, 2019, the Government of France released a proposal for
a 3 percent levy on revenues that certain companies generate from
providing certain digital services to, or aimed at, persons in France
(the Digital Services Tax, or the DST). The two houses of the French
parliament passed DST bills on April 9 and May 21, 2019, and agreed on
a final bill on July 4. President Emmanuel Macron signed the bill into
law on July 24.
On July 10, 2019, USTR initiated an investigation of the French DST
pursuant to section 302(b)(1)(A) of the Trade Act of 1974, as amended
(the Trade Act). The notice of initiation (84 FR 34042) solicited
written comments on, inter alia, the following aspects of the French
DST:
1. Discrimination: Available evidence, including statements by
French officials, indicates that the DST will amount to de facto
discrimination against U.S. companies. For example, the revenue
thresholds have the effect of subjecting to the DST larger companies,
which, in the covered sectors, tend to be U.S. companies, while
exempting smaller companies, particularly those that operate only in
France.
2. Retroactivity: The DST would be a substantively new tax that
applies retroactively to January 1, 2019. This feature calls into
question the fairness of the DST. Further, since the tax is
retroactive, companies covered by the DST may not track the data
necessary to calculate their potential liability back to the beginning
of 2019.
3. Unreasonable tax policy: The DST appears to diverge from norms
reflected in the U.S. tax system and the international tax system in
several respects. These apparent departures include:
Extraterritoriality; taxing revenue not income; and a purpose of
penalizing particular technology companies for their commercial
success.
Interested persons filed 36 written submissions. USTR and the Section
301 Committee convened a public hearing on August 19, 2019, during
which witnesses provided testimony and responded to questions. The
public submissions and a transcript of the hearing are available on
www.regulations.gov in docket number USTR-2019-0009.
Under Section 303 of the Trade Act, the U.S. Trade Representative
requested consultations with the Government of France regarding the
issues involved in the investigation. Consultations were held on
November 14, 2019.
Based on information obtained during the investigation, including
the public submissions and the public hearing, USTR and the Section 301
Committee have prepared a comprehensive report on the acts, policies,
and practices under investigation. The report is posted on the USTR
website. The report supports findings that the French DST is
unreasonable or discriminatory and burdens or restricts U.S. commerce.
II. Determination on the Act, Policy, or Practice Under Investigation
Based on the information obtained during the investigation and the
advice of the Section 301 Committee, and as reflected in the publicly
available report on the findings in the investigation, the U.S. Trade
Representative has made the following determination under sections
301(b) and 304(a) of the Trade Act (19 U.S.C. 2411(b) and 2414(a)): The
act, policy, or practice covered in the investigation, namely the
French DST, is unreasonable or discriminatory and burdens or restricts
U.S. commerce, and is thus actionable under section 301(b) of the Trade
Act. In particular:
1. The French DST is intended to, and by its structure and
operation does, discriminate against U.S. digital companies, including
due to the selection of services covered and the revenue thresholds.
2. The French DST's retroactive application is unusual and
inconsistent with prevailing tax principles and renders the tax
particularly burdensome for covered U.S. companies.
3. The French DST's application to revenue rather than income
contravenes prevailing tax principles and is particularly burdensome
for covered U.S. companies.
4. The French DST's application to revenues unconnected to a
physical presence in France contravenes prevailing international tax
principles and is particularly burdensome for covered U.S. companies.
5. The French DST's application to a small group of digital
companies contravenes international tax principles counseling against
targeting the digital economy for special, unfavorable tax treatment.
III. Action To Be Taken in the Investigation
Section 301(b) provides that upon determining that the acts,
policies, and practices under investigation are actionable and that
action is appropriate, the U.S. Trade Representative shall take all
appropriate and feasible action authorized under section 301(c),
subject to the specific direction, if any, of the President regarding
such action, and all other appropriate and feasible action within the
power of the President that the President may direct the U.S. Trade
Representative to take under section 301(b), to obtain the elimination
of that act, policy, or practice.
Section 301(c)(1)(B) of the Trade Act authorizes the U.S. Trade
Representative to impose duties on the goods of the foreign country
subject to the investigation. Pursuant to sections 301(b) and (c), the
U.S. Trade Representative proposes to determine that action is
appropriate and that appropriate action would include the imposition of
additional ad valorem duties of up to 100 percent on certain products
of France.
In determining the appropriate action, the U.S. Trade
Representative may take account of the level of harm to the U.S.
economy caused by France's DST. USTR seeks public comments on the level
of harm, including DST payments owed by U.S. companies, the annual
growth rate of such payments, and other effects, such as compliance
costs.
The Annex to this notice contains a preliminary list of 63 tariff
subheadings, with an estimated import trade value for calendar year
2018 of approximately $2.4 billion. The U.S. Trade Representative
proposes to draw a final list of products subject to additional duties
from this preliminary list.
Section 301(c)(1)(B) of the Trade Act also authorizes the U.S.
Trade Representative to impose fees or restrictions on the services of
the goods of the foreign country subject to the investigation. In light
of the fact that the actionable act, policy, or practice of France
involves a tax on U.S. service providers, the U.S. Trade Representative
is considering whether to impose fees or restrictions on services of
France. As noted below, USTR invites public comments on this matter.
IV. Request for Public Comments
In accordance with section 304(b) of the Trade Act (19 U.S.C.
2414(b)), USTR invites comments from interested persons with respect to
whether action is appropriate, and if so, the appropriate action to be
taken. To be assured of consideration, you must submit written comments
on the proposed action in response France's acts, policies, and
practices by January 6, 2020, and post-hearing rebuttal comments by
January 14, 2020.
[[Page 66958]]
USTR requests comments with respect to any issue related to the
action to be taken in this investigation. With respect to action in the
form of additional duties, USTR invites comments regarding:
The specific products to be subject to increased duties,
including whether products listed in the Annex should be retained or
removed, or whether products not currently on the list should be added.
The level of the increase, if any, in the rate of duty.
The level of the burden or restriction on the U.S. economy
resulting from the DST.
The appropriate aggregate level of trade to be covered by
additional duties.
In commenting on the inclusion or removal of particular products on
the list of products subject to the proposed additional duties, USTR
requests that commenters address specifically whether imposing
increased duties on a particular product would be practicable or
effective to obtain the elimination of France's acts, policies, and
practices, and whether imposing additional duties on a particular
product would cause disproportionate economic harm to U.S. interests,
including small- or medium-size businesses and consumers.
With respect to action in the form of fees or restrictions on
services of France, USTR seeks comments on issues such as:
Which services would be covered by a fee or restriction.
If a fee is imposed, the rate (flat or percentage) of the
fee, and the basis upon which any fee would be applied.
If a restriction is imposed, the form of such restriction.
Whether imposing fees or restrictions on services of
France would be practicable or effective to obtain the elimination of
France's acts, policies, and practices.
V. Hearing Participation
The Section 301 Committee will convene a public hearing in the main
hearing room of the U.S. International Trade Commission, 500 E Street
SW, Washington, DC 20436, beginning at 9:30 a.m. on Tuesday, January 7,
2020. You must submit requests to appear at the hearing by December 30,
2019. The request to appear must include a summary of testimony, and
may be accompanied by a pre-hearing submission. Remarks at the hearing
may be no longer than five minutes to allow for possible questions from
the Section 301 Committee.
All submissions must be in English and sent electronically via
www.regulations.gov. To submit a request to appear at the hearing via
www.regulations.gov, enter docket number USTR-2019-0009. In the `type
comment' field, include the name, address, email address, and telephone
number of the person presenting the testimony. Attach a summary of the
testimony, and a pre-hearing submission if provided, by using the
`upload file' field. The file name should include the name of the
person who will be presenting the testimony. In addition, please submit
a request to appear by email to [email protected]. In the subject
line of the email, please include the name of the person who will be
presenting the testimony, followed by `Request to Appear'. Please also
include the name, address, email address, and telephone number of the
person presenting testimony.
VI. Procedures for Written Submissions
All submissions must be in English and sent electronically via
www.regulations.gov. To submit comments via www.regulations.gov, enter
docket number USTR-2019-0009 on the home page and click ``search.'' The
site will provide a search results page listing all documents
associated with this docket. Find a reference to this Notice and click
on the link entitled `comment now! For further information on using the
www.regulations.gov website, please consult the resources provided on
the website by clicking on ``'how to use regulations.gov' on the bottom
of the home page. USTR will not accept hand-delivered submissions.
The www.regulations.gov website allows users to submit comments by
filling in a `type comment' field or by attaching a document using an
`upload file' field. USTR prefers that you submit comments in an
attached document. If you attach a document, it is sufficient to type
`see attached' in the `type comment' field. USTR strongly prefers
submissions in Adobe Acrobat (.pdf). If you use an application other
than Adobe Acrobat (or Word (.doc)), please indicate the name of the
application in the `type comment' field.
File names should reflect the name of the person or entity
submitting the comments. Please do not attach separate cover letters to
electronic submissions; rather, include any information that might
appear in a cover letter in the comments themselves. Similarly, to the
extent possible, please include any exhibits, annexes, or other
attachments in the same file as the comment itself, rather than
submitting them as separate files.
Do not submit comments containing business confidential information
(BCI) via www.regulations.gov. Instead, you should email any comments
containing BCI to [email protected]. The file name of the business
confidential version should begin with the characters `BC'. Any page
containing BCI must be clearly marked `BUSINESS CONFIDENTIAL' on the
top of that page and the submission should clearly indicate, via
brackets, highlighting, or other means, the specific information that
is business confidential. If you request business confidential
treatment, you must certify in writing that disclosure of the
information would endanger trade secrets or profitability, and that the
information would not customarily be released to the public. Filers of
submissions containing BCI also must submit a public version of their
comments. The file name of the public version, which you must submit on
www.regulations.gov, should begin with the character `P'. The `BC' and
`P' should be followed by the name of the person or entity submitting
the comments or rebuttal comments. If these procedures are not
sufficient to protect BCI or otherwise protect business interests,
please contact the USTR Section Hotline 301 line at (202) 395-5725 to
discuss whether alternative arrangements are possible.
USTR will post submissions in the docket for public inspection,
except BCI. You can view submissions on the https://www.regulations.gov
website by entering docket number USTR-2019-0009 in the search field on
the home page.
Joseph Barloon,
General Counsel, Office of the U.S. Trade Representative.
Annex
Note: All products that are classified in the 8-digit
subheadings of the HTS that are listed in this Annex are covered by
the proposed action. The product descriptions that are contained in
this Annex are provided for informational purposes only, and are not
intended to delimit in any way the scope of the proposed action. Any
questions regarding the scope of a particular HTS subheading should
be referred to U.S. Customs and Border Protection. In the product
descriptions, the abbreviation ``nesoi'' means ``not elsewhere
specified or included''.
[[Page 66959]]
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HTS subheading Product description
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0403.10.90................. Yogurt, not in dry form, whether or not
flavored or containing add fruit or cocoa.
0404.10.05................. Whey protein concentrates.
0405.10.10................. Butter subject to quota pursuant to chapter
4 additional U.S. note 6.
0405.10.20................. Butter not subject to general note 15 and
in excess of quota in chapter 4 additional
U.S. note 6.
0405.90.10................. Fats and oils derived from milk, other than
butter or dairy spreads, subject to quota
pursuant to chapter 4 additional U.S. note
14.
0406.10.84................. Fresh cheese, and substitutes for cheese,
cont. cows milk, nesoi, o/0.5% by wt. of
butterfat, descr in add U.S. note 16 to
Ch. 4, not GN15.
0406.10.88................. Fresh cheese, and substitutes for cheese,
cont. cows milk, nesoi, o/0.5% by wt. of
butterfat, not descr in add U.S. note 16
to Ch. 4, not GN 15.
0406.10.95................. Fresh cheese, and substitutes for cheese,
not cont. cows milk, nesoi, o/0.5% by wt.
of butterfat.
0406.20.10................. Roquefort cheese, grated or powdered.
0406.30.48................. Edam and gouda cheese, processed, not
grated or powdered, not subject to gen
note 15 or add. U.S. note 20 to Ch. 4.
0406.30.51................. Gruyere-process cheese, processed, not
grated or powdered, subject to add. U.S.
note 22 to Ch. 4.
0406.30.53................. Gruyere-process cheese, processed, not
grated or powdered, not subject to gen
note 15 or add. U.S. note 22 to Ch. 4.
0406.30.89................. Processed cheese (incl. mixtures), nesoi, w/
cow's milk, not grated or powdered,
subject to add U.S. note 16 to Ch. 4, not
GN15.
0406.40.54................. Blue-veined cheese, nesoi, in original
loaves, subject to add. U.S. note 17 to
Ch. 4.
0406.90.08................. Cheddar cheese, nesoi, subject to add. U.S.
note 18 to Ch. 4.
0406.90.12................. Cheddar cheese, nesoi, not subject to gen.
note 15 of the HTS or to add. U.S. note 18
to Ch. 4.
0406.90.16................. Edam and gouda cheese, nesoi, subject to
add. U.S. note 20 to Ch. 4.
0406.90.41................. Romano, Reggiano, Parmesan, Provolone, and
Provoletti cheese, nesoi, from cow's milk,
subject to add. U.S. note 21 to Ch. 4.
0406.90.42................. Romano, Reggiano, Parmesan, Provolone, and
Provoletti cheese, nesoi, from cow's milk,
not subj to GN 15 or Ch. 4 U.S. note 21.
0406.90.46................. Swiss or Emmentaler cheese with eye
formation, nesoi, subject to add. U.S.
note 25 to Ch. 4.
0406.90.48................. Swiss or Emmentaler cheese with eye
formation, nesoi, not subject to gen. note
15 or to add. U.S. note 25 to Ch. 4.
0406.90.56................. Cheeses, nesoi, from sheep's milk in
original loaves and suitable for grating.
0406.90.57................. Pecorino cheese, from sheep's milk, in
original loaves, not suitable for grating.
0406.90.90................. Cheeses & subst. for cheese (incl. mixt.),
nesoi, w/or from swiss, emmentaler or
gruyere, subj. to add. U.S. note 22 to Ch.
4, not GN15.
0406.90.95................. Cheeses & subst. for cheese (incl. mixt.),
nesoi, w/cows milk, w/butterfat o/0.5% by
wt, subject to Ch. 4 U.S. note 16 (quota).
0406.90.97................. Cheeses & subst. for cheese (incl. mixt.),
nesoi, w/cows milk, w/butterfat o/0.5% by
wt, not subject to Ch. 4 U.S. note 16, not
GN15.
0406.90.99................. Cheeses & subst. for cheese (incl. mixt.),
nesoi, w/o cows milk, w/butterfat o/0.5%
by wt, not GN15.
2204.10.00................. Sparkling wine, made from grapes.
3304.10.00................. Lip make-up preparations.
3304.20.00................. Eye make-up preparations.
3304.30.00................. Manicure or pedicure preparations.
3304.91.00................. Beauty or make-up powders, whether or not
compressed.
3304.99.50................. Beauty or make-up preparations &
preparations for the care of the skin,
excl. medicaments but incl. sunscreen or
sun tan preparations, nesoi.
3401.11.10................. Castile soap in the form of bars, cakes or
molded pieces or shapes.
3401.11.50................. Soap, nesoi; organic surface-active
products used as soap, in bars, cakes,
pieces, soap-impregnated paper, wadding,
felt, for toilet use.
3401.19.00................. Soap; organic surface-active products used
as soap, in bars, cakes, pieces; soap-
impregnated paper, wadding, felt, not for
toilet use.
3401.20.00................. Soap, not in the form of bars, cakes,
molded pieces or shapes.
3401.30.10................. Organic surface-active products for wash
skin, in liquid or cream, contain any
aromatic/mod aromatic surface-active
agent, put up for retail.
3401.30.50................. Organic surface-active products and
preparations for washing the skin, in
liquid or cream form, put up for retail
sale, nesoi.
4202.21.30................. Handbags, with or without shoulder strap or
without handle, with outer surface of
reptile leather.
4202.21.60................. Handbags, with or without shoulder strap or
without handle, with outer surface of
leather, composition or patent leather,
nesoi, n/o $20 ea.
4202.21.90................. Handbags, with or without shoulder strap or
without handle, with outer surface of
leather, composition or patent leather,
nesoi, over $20 ea.
4202.22.15................. Handbags, with or without shoulder straps
or without handle, with outer surface of
sheeting of plastics.
4202.22.40................. Handbags with or without shoulder strap or
without handle, with outer surface of
textile materials, wholly or in part of
braid, nesoi.
4202.22.45................. Handbags with or without shoulder strap or
without handle, with outer surface of
cotton, not of pile or tufted construction
or braid.
4202.22.60................. Handbags with or w/o shoulder strap or w/o
handle, outer surface of veg. fibers, exc.
cotton, not of pile or tufted construction
or braid.
4202.22.70................. Handbags with or w/o shoulder strap or w/o
handle, with outer surface containing 85%
or more of silk, not braided.
4202.22.81................. Handbags with or without shoulder strap or
without handle, with outer surface of MMF
materials.
4202.22.89................. Handbags with or without shoulder strap or
without handle, with outer surface of
textile materials nesoi.
6911.10.10................. Porcelain or china hotel, restaurant &
nonhousehold table and kitchenware.
6911.10.15................. Bone china household table & kitchenware
valued n/o $31.50/doz. pcs.
6911.10.25................. Bone china household table & kitchenware
valued o/$31.50/doz. pcs.
6911.10.35................. Porcelain or china (o/than bone china)
househld tabl. & kitch.ware in sets in
which aggregate val. of arts./U.S. note
6(b) n/o $56.
6911.10.37................. Porcelain or china (o/than bone china)
househld tabl. & kitch.ware in sets in
which aggregate val. of arts./U.S. note
6(b) o/$56 n/o $200.
[[Page 66960]]
6911.10.38................. Porcelain or china (o/than bone china)
househld tabl. & kitch.ware in sets in
which aggregate val. of arts./U.S. note
6(b) o/$200.
6911.10.41................. Porcelain or china (o/than bone china)
hsehld steins w/pewter lids, decanters,
punch bowls, spoons & rests, salt/pepper
sets, etc.
6911.10.45................. Porcelain or china (o/than bone china)
household mugs and steins w/o attached
pewter lids.
6911.10.52................. Porcelain or china (o/than bone china)
hsehld tabl/kit.ware n/in specif.sets,cups
o/$8 but n/o $29/dz, saucers o/$5.25 but n/
o $18.75/dz, etc.
6911.10.58................. Porcelain or china (o/than bone china)
hsehld tabl/kit ware n/in specif. sets,
cups o/$29/dz, saucers o/$18.75/dz, bowls
o/$33/dz, etc.
6911.10.60................. Porcelain or china (o/than bone china)
household serviette rings.
6911.10.80................. Porcelain or china (o/than bone china)
household tableware & kitchenware, not in
specified sets, nesoi.
6911.90.00................. Porcelain or china (o/than bone china)
household and toilet articles (other than
tableware or kitchenware), nesoi.
7323.92.00................. Cast iron, table, kitchen or o/household
arts. and parts thereof, enameled.
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[FR Doc. 2019-26325 Filed 12-5-19; 8:45 am]
BILLING CODE 3290-F0-P