Good morning. David Meyer here in Berlin, filling in for Alan.
When it comes to trade relations with Europe, President-elect Joe Biden is going to have a tricky start to his term. And while that’s partly down to the generally fractious transatlantic relationship cultivated by his predecessor, the biggest reason is Big Tech.
According to the Financial Times, France has ended its uneasy truce with the Trump administration over the issue of its so-called digital services tax. The paper reports that French tax authorities have been in touch with the likes of Facebook and Amazon, demanding that they pay the tax—designed to ensure French sales generate French tax revenues—for this year.
It’s now likely that the U.S. will respond with tariffs on things like French cheese and handbags, as threatened by U.S. Trade Representative Robert Lighthizer earlier this year.
A multilateralist Biden administration will be well-placed to clean up this mess. The Franco-American truce only existed because the countries agreed to let global digital-tax talks play out, but the U.S. pulled out of those OECD negotiations in June, citing coronavirus distractions. France claims it’s only going it alone until the OECD members (or the EU) come up with common rules. In theory, the Biden administration could make a global deal a reality.
But that’s no certainty. After all, the tech giants targeted by the tax are mostly American, and a global agreement could leave the U.S. worse off—though on the other hand, as the OECD warned recently, failing to strike that deal could trigger a trade war that lops a point off global GDP.
Tough choices lie ahead for Biden and his team. Meanwhile, Europe will continue developing its own approach to digital regulation.
On that note, the European Commission just proposed a new law that would “offer an alternative European model to data handling [practices] of major tech platforms.” It promises companies that, if they choose to share commercially-sensitive or personal data with other firms, they will be able to do so through neutral intermediaries that keep the information “trusted and protected.”
There’s a lot that might be achieved with this approach—particularly when it comes to the green transition and the development of personalized medicine—but it’s also an explicit challenge to U.S. tech giants whose value is largely bound up in their data hoards.
So stay tuned to both these sagas, because they’re about to get interesting. News below. And for those of you in the U.S., enjoy your Thanksgiving weekend—CEO Daily will return Monday.