NABI Comments on Recent Section 301 DST Investigation and Trade Remedies
NABI Urges United States Trade Representative to Consider Only Services in Any Retaliation Action in Digital Service Tax Investigations
NABI Press Release – FOR IMMEDIATE RELEASE
National Association of Beverage Importers, Inc.
July 7, 2020
The National Association of Beverage Importers, Inc. (NABI) urged the United States Trade Representative (USTR) to consider only services and not goods, such as wine, distilled spirits, and beer, in any retaliation actions arising from the recently opened Section 301 investigations of Digital Services Tax (DST) adopted or being considered by Austria, Brazil, Czech Republic, European Union, India, Indonesia, Italy, Spain, Turkey, and the United Kingdom. NABI advocated this position in a comment letter submitted in this USTR action (Docket No. USTR 2020-0022).
Last year, USTR determined that the DST adopted by France discriminates against United States businesses and is not consistent with norms of accepted taxation policies. The recently initiated investigations expand the USTR agenda on DSTs that it believes target large United States tech companies. At this initial stage, USTR asked for public comments on several points including the question of what is the appropriate action, if any, should USTR determine that the DST, in one or more of the jurisdictions, violates section 301 of the Trade Act of 1974.
“Imported wines and distilled spirits have paid their dues in the trade war with Europe” said Robert M. Tobiassen, NABI President, “and should not be collateral damage in yet another trade dispute, especially one that deals with services. Moreover, USTR is now proposing to expand the retaliatory tariffs to beer, gin, and vodka in the Airbus dispute that will only cause more harm to American importers, jobs, and consumers.” A Congressional Research Service report shows that wine and distilled spirits as imposed in October 2019, represents a 38 percent share of the value of total targeted imports covered by the retaliatory tariffs; a percentage that will only increase the burden on Americans if USTR expands the retaliatory tariffs to include beer, gin, and vodka, or some of the other beverage alcohol products on the original list but not tariffed.
There are multiple principles and precedents in trade disputes for limiting trade remedies to the same sector as that of the underlying violation, nullification, or impartment was found. DST is a service and not a good. Companies in the named jurisdictions provide services in the United States that include banking, financial transactions, insurance, and services related to foreign investment, among others, in the United States. By focusing the trade sanctions on other business categories, more specifically services, the business voices in Europe and the other countries calling on their trade authorities to seek a resolution of the dispute is expanded beyond the agriculture and manufacturing industries.
“Trade remedies applied to services,” said Tobiassen “would do less harm to small and medium sized businesses and consumers in the United States. Applying the trade remedies to services poses far less, if any, of a financial burden on these American businesses, particularly as many of them continue to bear the burden of retaliatory tariffs in the Airbus dispute and suffer adverse domestic market losses due to the COVID-19 crisis.”
Finally, the Organization for Economic Cooperation and Economic Development (OECD) has multilateral negotiations on the appropriate framework for taxing digital services. While the United States and others have not reached a consensus and have serious differences, nevertheless, this remains a forum for reaching agreement on a digital service tax framework that could be applied uniformly. In August 2019, during the USTR comment period on the French DST investigation, several commenters urged the continued work at OCED and opposed the imposition of tariffs on goods. NABI encourages the continued work at the OECD.
For further information, please contact:
Robert M. Tobiassen, NABI President at email@example.com ,
 https://crsreports.congress.gov/product/pdf/IF/IF11364  https://home.kpmg/us/en/home/insights/2019/12/tnf-oecd-responds-treasury-letter-digital-services-tax.html  United States Chamber of Commerce Letter, dated August 14, 2019, at page 4. IBM Letter, dated August 19, 2019. Statement of the United States Council for International Business, dated August 19, 2019. Statement of the Internet Association. (Docket File USTR 2019-0009)  https://news.bloombergtax.com/daily-tax-report-international/u-s-will-participate-in-upcoming-global-digital-tax-discussions