[Federal Register Volume 86, Number 60 (Wednesday, March 31, 2021)]
[Notices]
[Pages 16829-16832]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-06628]


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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

[Docket Number USTR-2021-0007]


Proposed Action in Section 301 Investigation of the United 
Kingdom's Digital Services Tax

AGENCY: Office of the United States Trade Representative.

ACTION: Request for comments and notice of public hearing.

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SUMMARY: The Office of the United States Trade Representative (USTR) 
requests written comments regarding a potential trade action in 
connection with the Section 301 investigation of the United Kingdom's 
Digital Services Tax (DST). USTR also will convene virtual public 
hearings and accept rebuttal comments in relation to the potential 
action.

DATES: 
    April 21, 2021: To be assured of consideration, submit requests to 
appear at a hearing, along with a summary of the testimony, by this 
date.
    April 30, 2021: To be assured of consideration, submit written 
comments by this date.
    May 3, 2021: Multi-jurisdictional virtual hearing on proposed 
actions.
    May 4, 2021 at 9:30 a.m.: Virtual hearing on the United Kingdom DST 
proposed action.
    May 10, 2021: To be assured of consideration, submit multi-
jurisdictional hearing rebuttal comments by this date.
    May 11, 2021: To be assured of consideration, submit the United 
Kingdom DST hearing rebuttal comments by this date.

ADDRESSES: Submit documents in response to this notice, including 
written comments and hearing appearance requests, through the online 
USTR portal: https://comments.ustr.gov/s/.

FOR FURTHER INFORMATION CONTACT: For questions concerning the 
investigation, please contact Ben Allen or Patrick Childress, Assistant 
General Counsels at (202) 395-9439 and (202) 395-9531, respectively; 
Robert Tanner, Director, Services and Investment at (202) 395-6125; or 
Michael Rogers, Director, Europe and the Middle East at (202) 395-2684. 
For issues with on-line submissions, please contact the USTR Section 
301 line at (202) 395-5725.

SUPPLEMENTARY INFORMATION: 

I. Proceedings in the Investigation

    The United Kingdom's has adopted a DST that applies a two percent 
tax on the revenues of certain search engines, social media platforms 
and online marketplaces. The United Kingdom's DST applies only to 
companies with digital services revenues exceeding [pound]500 million 
and United Kingdom digital services revenues exceeding [pound]25 
million.
    On June 2, 2020, the U.S. Trade Representative initiated an 
investigation of the United Kingdom's DST pursuant to section 
302(b)(1)(A) of the Trade Act of 1974, as amended (Trade Act). See 85 
FR 34709 (June 5, 2020) (notice of initiation). The notice of 
initiation solicited written comments on, inter alia, the following 
aspects of the United Kingdom's DST: Discrimination against U.S. 
companies; retroactivity; and possibly unreasonable tax policy. With 
respect to tax policy, USTR solicited comments on, inter alia, whether 
the DST diverged from principles reflected in the U.S. and 
international tax systems including extraterritoriality; taxing revenue 
not income; and a purpose of penalizing particular technology companies 
for their commercial success. Interested persons filed over 380 written 
submissions in response. The public submissions are available on 
www.regulations.gov in docket number USTR-2020-0022.
    Under section 303 of the Trade Act, the U.S. Trade Representative 
requested consultations with the government of the United Kingdom 
regarding the issues involved in the investigation. Consultations were 
held on December 4, 2020.
    Based on information obtained during the investigation, USTR 
prepared a comprehensive report on the United Kingdom's DST (United 
Kingdom DST Report). The United Kingdom DST Report is posted on the 
USTR website at https://ustr.gov/issue-areas/enforcement/section-301-investigations/section-301-digital-services-taxes. The report includes 
a full description of the United Kingdom's DST, and supports findings 
that the United Kingdom's DST is unreasonable and discriminatory and 
burdens or restricts U.S commerce.
    On January 14, 2021, based on the information obtained during the 
investigation and the advice of the Section 301 Committee, the U.S. 
Trade Representative determined that the United Kingdom's DST is 
unreasonable or discriminatory and burdens or restricts U.S. commerce, 
and therefore is actionable under sections 301(b) and 304(a) of the 
Trade Act (19 U.S.C. 2411(b) and 2414(a)). See 86 FR 6406 (January 21, 
2021).

II. Proposed Action

    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), USTR 
proposes that the U.S. Trade Representative should determine that 
action is appropriate and that appropriate action would include the 
imposition of additional ad valorem tariffs on certain products of the 
United Kingdom.
    In particular, USTR proposes to impose additional tariffs of up to 
25 percent ad valorem on an aggregate level of trade that would collect 
duties on goods of the United Kingdom in the range of the amount of the 
DST that the

[[Page 16830]]

United Kingdom is expected to collect from U.S. companies. Initial 
estimates indicate that the value of the DST payable by U.S.-based 
company groups to the United Kingdom will be up to approximately $325 
million per year.
    USTR further proposes that the goods of the United Kingdom subject 
to additional tariffs would be drawn from the preliminary list of 
products in the Annex to this notice, as specified by the listed eight-
digit tariff subheadings.

III. 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.
    USTR requests comments with respect to any issue related to the 
action to be taken in this investigation. With respect to the proposed 
tariff action outline above, USTR specifically invites comments 
regarding:
     The level of the burden or restriction on U.S. commerce 
resulting from the United Kingdom's DST, including the amount of DST 
payments owed by U.S. companies, the annual growth rate of such 
payments, and other effects, such as compliance costs.
     The appropriate aggregate level of trade to be covered by 
additional duties.
     The level of the increase, if any, in the rate of duty.
     The specific products to be subject to increased duties, 
including whether the tariff subheadings listed in the Annex should be 
retained or removed, or whether tariff subheadings not currently on the 
list should be added.
    In commenting on the inclusion or removal of particular products on 
the preliminary list of products subject to the proposed additional 
duties, USTR requests that commenters specifically address whether 
imposing increased duties on a particular product would be practicable 
or effective to obtain the elimination of the United Kingdom'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.
    Simultaneously with this notice, USTR also is requesting public 
comments on proposed trade actions in five other DST investigations 
initiated at the same time as the United Kingdom DST investigation. 
Certain interested persons may wish to provide written comments or oral 
testimony on multi-jurisdictional issues common to two or more 
investigations. To avoid duplication, the USTR portal will have a 
separate docket for multi-jurisdictional submissions, and USTR will 
hold a separate multi-jurisdictional hearing.
    To be assured of consideration, you must submit written comments on 
the proposed action by April 30, 2021, and post-hearing rebuttal 
comments by May 10, 2021 for the multi-jurisdictional hearing, and by 
May 11, 2021 for the United Kingdom DST hearing.

IV. Hearing Participation

    The Section 301 Committee will convene a virtual public hearing for 
comments pertaining to the United Kingdom DST proposed action on May 4, 
2021, beginning at 9:30 a.m. Those requesting to appear at this hearing 
should have comments applicable only to the United Kingdom DST proposed 
action.
    The Section 301 Committee will convene a virtual public hearing for 
comments pertaining to multiple jurisdictions on May 3, 2021, beginning 
at 9:30 a.m. Those requesting to appear at the multi-jurisdictional 
hearing should have comments that are applicable to two or more DST 
investigations.
    For either hearing, you must submit a request to appear at the 
specific hearing using the electronic portal at https://comments.ustr.gov/s/. You will be able to view a docket entitled 
`Request to Appear at Hearing on Proposed Action in Section 301 
Investigation of the United Kingdom's Digital Services Tax.' Requests 
to appear must include a summary of testimony, and may be accompanied 
by a pre-hearing submission. Remarks at the hearing are limited to five 
minutes to allow for possible questions from the Section 301 Committee. 
All submissions must be in English. To be assured of consideration, 
USTR must receive your request to appear by April 21, 2021.

V. Procedures for Written Submissions

    You must submit written comments, rebuttal comments, and requests 
to appear at the hearing using the electronic portal at https://comments.ustr.gov/s. You will be able to view a docket entitled 
`Comments Concerning Proposed Action in Section 301 Investigation of 
the United Kingdom's Digital Services Tax' on the portal, docket number 
USTR-2021-0007.
    You do not need to establish an account to submit comments. Fields 
with a gray (BCI) notation are for Business Confidential Information 
and the information entered will not be publicly available. Required 
fields are marked `Required' and will have a red asterisk (*). Fields 
with a green (Public) notation will be viewable by the public.
    The first screen of the portal requires you to enter identification 
and contact information. Third party organizations such as law firms, 
trade associations, or customs brokers, should identify the full legal 
name of the organization they represent, and identify the primary point 
of contact for the submission. The remaining fields of the form are 
optional.
    After entering the identification and contact information, you can 
complete the remainder of the questionnaire, or any portion of it by 
clicking `Next.' You can comment on multiple products in a single 
entry, or submit multiple comments. You will be able to navigate 
through each screen of the form by clicking `Next,' with or without 
entering a response to each field on an individual screen or page. 
Additionally, you will be able to upload documents at the end of the 
form and designate whether USTR should treat the documents as business 
confidential or public information.
    For uploads containing BCI, the file name of the business 
confidential version should begin with the characters `BCI'. 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 BCI. 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. Parties uploading attachments 
containing BCI also must submit a public version of their comments. The 
file name of the public version, which must be uploaded on https://comments.ustr.gov/s/, should begin with the character `P'. The `BCI' 
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 
attachments uploaded to the docket for public inspection, except for 
attachments marked as business confidential.

[[Page 16831]]

    You can view all public submissions on the USTR portal at https://comments.ustr.gov/s.

Greta Peisch,
General Counsel, Office of the United States Trade Representative.

Annex

    Note: All products that are classified in the eight-digit 
subheadings of the Harmonized Tariff Schedule of the United States 
(HTSUS) 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 HTSUS subheading 
should be referred to U.S. Customs and Border Protection. In the 
product descriptions, the abbreviation ``nesoi'' means ``not 
elsewhere specified or included''.


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      HTSUS subheading                   Product description
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3213.90.00.................  Artists', students' or signboard painters'
                              colors, in tablets, tubes, jars, bottles,
                              pans or in similar packings, not in sets.
3303.00.10.................  Floral or flower waters, not containing
                              alcohol.
3303.00.20.................  Perfumes and toilet waters, other than
                              floral or flower waters, not containing
                              alcohol.
3303.00.30.................  Perfumes and toilet waters, containing
                              alcohol.
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.
3304.99.10.................  Petroleum jelly put up for retail sale.
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.
3305.10.00.................  Shampoos.
3305.20.00.................  Preparations for permanent waving or
                              straightening the hair.
3305.30.00.................  Hair lacquers.
3305.90.00.................  Preparations for use on the hair, nesoi.
3306.90.00.................  Preparations for oral or dental hygiene,
                              including denture fixative pastes and
                              powders, excluding dentifrices.
3307.10.10.................  Pre-shave, shaving or after-shave
                              preparations, not containing alcohol.
3307.10.20.................  Pre-shave, shaving or after-shave
                              preparations, containing alcohol.
3307.30.10.................  Bath salts, whether or not perfumed.
3307.30.50.................  Bath preparations, other than bath salts.
3307.49.00.................  Preparations for perfuming or deodorizing
                              rooms, including odoriferous preparations
                              used during religious rites, nesoi.
3307.90.00.................  Depilatories and other perfumery, cosmetic
                              or toilet preparations. nesoi.
4201.00.60.................  Saddlery and harnesses for animals nesoi,
                              (incl. traces, leads, knee pads, muzzles,
                              saddle cloths and bags and the like), of
                              any material.
6104.43.20.................  Women's or girls' dresses, knitted or
                              crocheted, of synthetic fibers, nesoi.
6201.12.20.................  Men's or boys' overcoats, carcoats, capes,
                              & similar coats of cotton, not knit or
                              crocheted, not containing 15% or more by
                              wt of down, etc.
6201.92.45.................  Men's or boys' anoraks, windbreakers & sim
                              articles nesoi, not knit/crochet, cotton,
                              not cont. 15% or more by wt of down, etc,
                              o/than rec perf outwear.
6202.12.20.................  Women's or girls' overcoats, carcoats, etc,
                              not knitted or crocheted, of cotton, not
                              containing 15% or more by weight of down,
                              etc.
6202.13.40.................  Women's or girls' overcoats, carcoats,
                              capes, cloaks and similar articles, not
                              knitted or crocheted, of man-made fibers,
                              nesoi.
6202.92.90.................  Women's/girls' anoraks, windbreakers &
                              similar articles, nt knit/crochet, cotton,
                              nt cont. 15% or more by wt of down, etc, o/
                              than rec perf outwear.
6204.43.40.................  Women's or girls' dresses, not knitted or
                              crocheted, of synthetic fibers, nesoi.
6204.44.40.................  Women's or girls' dresses, not knitted or
                              crocheted, of artificial fibers, nesoi.
6204.49.10.................  Women's or girls' dresses, not knitted or
                              crocheted, containing 70% or more by
                              weight of silk or silk waste.
6205.20.20.................  Men's or boys' shirts, not knitted or
                              crocheted, of cotton, nesoi.
6215.10.00.................  Ties, bow ties and cravats, not knitted or
                              crocheted, of silk or silk waste.
6403.59.30.................  Footwear w/outer soles and uppers of
                              leather, not covering the ankle, welt,
                              nesoi.
6403.59.90.................  Footwear w/outer soles and uppers of
                              leather, not cov. ankle, n/welt, for
                              persons other than men, youths and boys.
6403.91.30.................  Footwear w/outer soles of rubber/plastics/
                              composition leather & uppers of leather,
                              covering the ankle, welt.
6403.99.60.................  Footwear w/outer soles of rubber/plastics/
                              comp. leather & uppers of leather, n/cov.
                              ankle, n/welt, for men, youths and boys,
                              nesoi.
6404.20.40.................  Footwear w/outer soles of leather/comp.
                              leath., n/o 50% by wt. rub./plast. or rub./
                              plast./text. & 10%+ by wt. rub./plast.,
                              val. o/$2.50/pr.
6903.90.00.................  Refractory ceramic goods (o/than of
                              siliceous fossil meals or earths), nesoi.
6907.23.90.................  Glazed ceramic tiles nesoi, of a H2O absorp
                              coeff by wt >10%.
6907.30.90.................  Glazed ceramic mosaic cubes nesoi, o/t
                              subheading 6907.40.
6909.19.50.................  Ceramic wares for laboratory, chemical or
                              other technical uses (o/than of porcelain
                              or china), nesoi.
6910.90.00.................  Ceramic (o/than porcelain or china) sinks,
                              washbasins, baths, bidets, water closet
                              bowls, urinals & siml. sanitary fixtures.
7113.11.50.................  Silver articles of jewelry and parts
                              thereof, nesoi, valued over $18 per dozen
                              pieces or parts.
7113.19.29.................  Gold necklaces and neck chains (o/than of
                              rope or mixed links).
7113.19.50.................  Precious metal (o/than silver) articles of
                              jewelry and parts thereo, whether or not
                              plated or clad with precious metal, nesoi.
7116.20.50.................  Precious stone articles, nesoi.
7117.19.90.................  Imitation jewelry (o/than toy jewelry &
                              rope, curb, cable, chain, etc.), of base
                              metal (wheth. or n/plated w/prec. metal),
                              nesoi.
8415.82.01.................  Air conditioning machines incorporating a
                              refrigerating unit, nesoi.
8418.40.00.................  Freezers of the upright type, not exceeding
                              900 liters capacity, electric or other.
8418.50.00.................  Refrigerating or freezing display counters,
                              cabinets, showcases and similar
                              refrigerating or freezing furniture.
8418.69.01.................  Refrigerating or freezing equipment nesoi.

[[Page 16832]]

 
8479.50.00.................  Industrial robots, not elsewhere specified
                              or included.
8532.24.00.................  Ceramic dielectric fixed capacitors,
                              multilayer.
9001.10.00.................  Optical fibers, optical fiber bundles and
                              cables, other than those of heading 8544.
9401.71.00.................  Seats nesoi, w/metal frame (o/than of
                              heading 9402), upholstered.
9403.10.00.................  Furniture (o/than seats) of metal nesoi, of
                              a kind used in offices.
9403.20.00.................  Furniture (o/than seats) of metal nesoi, o/
                              than of a kind used in offices.
9403.40.90.................  Furniture (o/than seats) of wood (o/than
                              bentwood) nesoi, of a kind used in the
                              kitchen & not design. for motor vehicl.
                              use.
9403.60.80.................  Furniture (o/than seats & o/than of 9402)
                              of wooden (o/than bentwood) nesoi.
9403.89.60.................  Furniture (o/than seats & o/than of 9402)
                              of materials nesoi.
9503.00.00.................  Toys, including riding toys o/than
                              bicycles, puzzles, reduced scale models.
9504.50.00.................  Video game consoles and machines, other
                              than those of heading 9504.30.
9504.90.40.................  Game machines (o/than coin- or token-
                              operated) and parts and accessories
                              thereof.
9504.90.60.................  Chess, checkers, backgammon, darts and o/
                              table and parlor games played on boards of
                              a special design and parts thereof; poker
                              chips and dice.
9504.90.90.................  Articles nesoi for arcade, table or parlor
                              games & parts & access.; automatic bowling
                              alley equipment & parts and accessories
                              thereof.
9508.10.00.................  Traveling circuses and traveling
                              menageries; parts and accessories thereof.
9508.90.00.................  Merry-go-rounds, boat-swings, shooting
                              galleries and other fairground amusements;
                              traveling theaters; parts and accessories
                              thereof.
9603.29.80.................  Shaving brushes, hair brushes, nail
                              brushes, eyelash and other toilet brushes
                              (o/than tooth brushes), valued o/40 cents
                              each.
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[FR Doc. 2021-06628 Filed 3-30-21; 8:45 am]
BILLING CODE 3290-F1-P