This is from the Section 301 report on France’s Digital Services Tax issued by USTR earlier this week:
A. France’s Digital Services Tax Discriminates Against U.S. Digital Companies
The evidence collected in this investigation, including witness testimony, written comments, news reports, and expert commentary, indicates that the French DST is intended to, and by its structure and operation does, discriminate against U.S. digital companies. First, statements of French officials show that the DST is intended to target certain U.S. digital companies and not French companies. Second, the selection of the services covered by the tax, including carve-outs in the definition of such services, targets U.S. companies and not French companies. The DST’s revenue thresholds likewise target U.S. companies as opposed to French ones. Finally, the DST’s relationship to other taxes discriminates against U.S. companies.
The details of USTR's rationale for a finding of discrimination follow the short summary excerpted above.
I'm not sure the Section 301 approach to addressing trade barriers will outlast the Trump administration, but if it does, it will be interesting to analyze the reasoning on discrimination in these reports. Here, as I read the report's reasoning, we've got a "subjective intent" rationale, and then two design, structure and architecture-type rationales. That leaves me with the following questions:
-- Is subjective intent a required element? Does the presence of subjective intent lower the amount of other evidence required?
-- What degree of discriminatory effect on foreign goods or services must be shown?
As for what might happen in this case:
V. CONCLUSIONS
...
A range of tools may be appropriate to address these serious matters, including intensive bilateral engagement, WTO dispute settlement, or “imposing duties, fees, or other import restrictions on the goods or services of [France].”
With regard to a possible WTO complaint, see the policy brief from Gary Hufbauer and Zhiyao (Lucy) Lu here.