Bi-Partisan Letter From US Senators Call for Trade Retaliation Against Canada Over the DST

US Senators are once again calling for trade sanctions against Canada should Canada move forward with the Digital Services Tax.

Trade tensions between Canada and the United States are continuing to escalate thanks to Canada’s continued anti-technology policies. Threats of trade wars have been a continued ongoing theme with the Digital Services Tax, the Online Streaming Act, and the Online News Act. Back in January, for instance, top US Senators from the powerful Finance Committee urged the USTR (United States Trade Representative) to take steps to dissuade Canada from moving forward with all three policies because for reasons that should be obvious, they all target American businesses in a discriminatory manner.

It isn’t as though diplomacy options haven’t been used, either. The US ambassador to Canada has warned Canada not once, not twice, not three times, but at least 4 times about the potential trade retaliation that could move forward should Canada continue to push through all of these anti-innovation policies. Obviously, the US has been calling on Canada to pump the brakes on these policies, but Canada has continued to ignore these calls and warnings, passing all three in the process.

Now, we are learning that a follow-up letter has been issued by those same senators urging the USTR to enact retaliatory measures should Canada move forward with the Digital Services Tax. From the letter (PDF):

Yet, despite the engagement by your office, by other U.S. government officials across the Administration, and by members of Congress, Canada continues to move forward with a discriminatory digital services tax (DST) that targets American businesses. According to the Bureau of Economic Analysis, nearly 8 million Americans work in the digital economy. We must not allow foreign governments to target U.S. companies and the Americans they employ simply because their hard work and innovation have led them to become global leaders in this critical sector.

We appreciate you previously noting that “[i]f Canada adopts a DST, USTR would examine all options….” Regrettably, Canada’s political leadership has not been dissuaded.

You must now make clear that your office will immediately respond using available trade tools upon Canada’s enactment of any DST. When you take these steps, you will do so with our full support.

This is not a matter that warrants extensive new analysis. The details and content of this tax are already well known and established. USTR has exhaustively examined nearly identical measures and has convincingly demonstrated why they are discriminatory against the United States. Specifically, like many other DSTs analyzed by your office in various Section 301 reports, Canada’s DST Act uses specific criteria, including global revenue thresholds, to target U.S. companies, and it targets the precise services where U.S. companies are leaders.

As we noted, we want the strong economic relationship between the United States and Canada to continue growing. That will become immensely challenging, however, if Canada subjects innovative American companies to arbitrary discrimination without facing any consequences. We stand ready to assist and support you to ensure that you apply the requisite response immediately, if and when Canada may adopt its proposed DST.

The letter was signed by Ron Wyden and Michael D. Crapo.

So, definitely not a letter that minces words, here. Essentially, the moment Canada implements the Digital Services Tax is the moment the country can expect trade retaliation from the United States. What is interesting is the fact that the US Senators specifically dialed in on the Digital Services Tax, not mentioning the other two pieces of legislation. It’s possible that senators are seeing the platforms basically dropping news links in Canada. So, without news links, there’s no real way for the Canadian government to steal money from the platforms, ultimately harming the very media companies that the government claimed to be helping. Further, the Online Streaming Act is unlikely to be implemented until at least 2025 thanks to ongoing “consultations” by the CRTC. That, for now at least, leaves the Digital Services Tax.

Supporters of these legislative efforts have pushed back in the past about the prospect of Canada getting (rightfully) slapped with trade sanctions over this. Like pretty much every other effort to try and sell Canada’s anti-technology policies, the effort wound up being an abysmal failure. At one point, some random columnist opined that the trade sanctions won’t happen because, uh, Trudeau has probably got that all figured out. Yeah, that’s the ticket. They already have it all figured out (narrator: it wasn’t even close to being figured out).

Indeed, throughout the Senate hearings, the Canadian government has generally taken an approach of plugging their fingers into their ears and shouting “lalala! I can’t hear you!” when it comes to threats of trade sanction from the United States. When questioned by senators, Canadian trade officials tried to pretend that it wasn’t really hearing any concerns at all and just said it was all just questions regarding the lawmaking presence – this despite the existence of the threatening letters at the time. So, really trying to wish away these problems while refusing to really address them in the first place.

Either way, it is looking like the threats of trade sanctions from the United States isn’t going away any time soon. What’s more, a quick breeze through the headlines on larger media sites have largely remained silent on the existence of this letter. We’ll find out if the Canadian media is trying to ignore these threats entirely or if they are just slow on the uptick on this one. Regardless, we do know that ignoring the problems isn’t going to make those problems go away. All this time, these problems certainly didn’t go away on their own, that’s for sure.

(Via @MGeist)

Drew Wilson on Twitter: @icecube85 and Facebook.

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