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  • Taittinger champagne bottles are displayed at a Nicolas French wine specialist store in Paris, France, Dec. 21, 2016.

    Taittinger champagne bottles are displayed at a Nicolas French wine specialist store in Paris, France, Dec. 21, 2016. | Photo: Reuters

Published 3 December 2019

The USTR Office also threatens measures against Austria, Italy, and Turkey, which have also applied taxes to digital services.

France and the European Union (EU) Tuesday said they are ready to retaliate if U.S. President Donald Trump acted on a threat to impose taxes of up to 100 percent on imports of champagne, handbags and other French products worth US$2.4 billion.

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"The EU will act and react as one and remain united. We are coordinating with France the next steps," EU spokesperson Daniel Rosario said and explained that the U.S. tariffs have not yet been applied.

"If that happens, and when it happens, we will work from it."

The threat of punitive tariffs followed a U.S. government investigation, which found that a new digital services tax, the "Google, Apple, Facebook, and Amazon" (GAFA) tax, would harm U.S. technology companies and will intensify a festering trade dispute.

The Office of the U.S. Foreign Trade Trade Representative (USTR) then announced that additional tariffs would apply to 63 different types of goods.

Gafa Tax: Roquefort, yogurt, wine, and soap were taxed at 100 percent by Washington in retaliation?

It also mentioned that U.S. authorities are evaluating whether they will open similar investigations against Austria, Italy, and Turkey, which have also applied taxes to digital services.

In July, France officially enacted a 3 percent tax on sales of Internet big companies to force them to pay taxes in that country.

The European Union also tried to introduce a GAFA tax in its 28 member countries. However, some countries refused to do so precisely for fear of U.S. reprisals.

As a result, most EU countries postponed the application of this measure until the Organization for Economic Development and Cooperation (OECD) finds a more global solution.

However, the European Commission also indicated that it will resume the taxation initiative at the community level if there is no agreement by the end of 2020.

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