France seeks resolving trade sanctions with Biden administration

French Finance Minister Bruno Le Maire said on Thursday that resolving trade sanctions was his priority with the incoming US administration in order to keep a trade war from adding to the economic pain from the coronavirus pandemic.

US President Donald Trump’s administration hit France with tariff duties on wine after failing to resolve a 16-year dispute over aircraft subsidies with the European Union. It also threatened to impose tariffs on French cosmetics, handbags and other imports over Paris’ digital service tax on big internet companies.

“The consequences of trade sanctions on our economy are very negative and very detrimental. We already have the pandemic crisis,” Le Maire said in an interview at the Reuters Next conference. “We should not add any kind of difficulties to this very difficult economic situation. A trade war is not in the interests of the U.S. and not in the interest of Europe.”

Le Maire said that he had received no “initial signals” from the Biden administration about how it would deal with trade, but that he hoped to visit Washington in February. If the Biden administration gives its support, Le Maire said stalled talks among nearly 140 countries to rewrite the rules of international taxation could be revived at the OECD and wrapped up within six months.

Trade tensions with Washington have added to the clouds hanging over the French economy in the last year, as it was already struggling with its deepest downturn since World War II. The US government this week began collecting new duties on certain non-sparkling wines as well as cognacs and other brandies from France, adding to the pressure on the economy as it struggles with a slow start to its vaccination programme.

France’s government breathed a sigh of relief last Friday after the US indefinitely delayed tariffs on French cosmetics and other goods designed as retaliation for a French tax on technology giants. The US Trade Representative’s office said in a statement last Thursday that it suspended the tariffs targeting France, which had been scheduled to enter in force this week, because it is investigating similar tech taxes from a growing number of other countries, too.

Le Maire said his government “takes note” of the US decision and called for a global agreement on taxing online behemoths like Google and Amazon. It’s among multiple trade disputes that have damaged trans-Atlantic ties in recent years. In a statement Friday to The Associated Press, Le Maire urged “a global settlement of trade disagreements between the United States and Europe, which make everyone lose, especially in this time of crisis.”

The US government argues that the French tax unfairly targets American companies. France says that its tax targets any company with huge revenues, and is aimed at making the tech giants pay taxes in the countries where they do business instead of tax havens. While France has led the charge on tech taxes, several other countries have introduced similar measures that worry the US, including Britain, India, Turkey and Brazil. Negotiations on a global tech tax deal at the Organization for Economic Cooperation and Development stalled after the Trump Administration pulled out last summer. France and others hope that the Biden Administration will be more amenable to reaching a deal.

Despite a weak start to the year, Le Maire said that his forecast for 6% growth in 2021 remained within reach and that he was confident of a strong recovery in the second half of the year. But he added: “We have to remain humble and cautious because we have been fooled by the virus many times.” The minister said he was not worried about the initially slow roll-out of the COVID-19 vaccine in France.

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