Home Business The White House is about to change hands. Is it time for the European Union to take the opportunity to “fire” and control its fate?
The White House is about to change hands. Is it time for the European Union to take the opportunity to "fire" and control its fate?

The White House is about to change hands. Is it time for the European Union to take the opportunity to “fire” and control its fate?

by YCPress

“This is a huge turning point!” december 15th, after the European Union published two important bills regulating digital services, the Digital Services Act and the Digital Market Law, the German newspaper Le Monde sighed.

The bill’s stricter regulation and digital tax on some digital service giants such as Internet companies are believed to be directly aimed at American companies such as Google, Amazon, Apple, Facebook (GAFA).

This is not the first time that an EU country has taken action. As early as September 2018, the European Union and Germany announced an antitrust investigation against Amazon. In December this year, France issued fines of 100 million euros and 35 million euros to Google and Amazon respectively. In addition, Britain, France and other countries have also announced digital taxes on American giants in recent years.

The United States expressed strong dissatisfaction with a series of targeted measures in EU countries and threatened to launch a strong counterattack, and a “digital tax war” in Europe and the United States is getting worse.

Under the pressure of the United States, why is the European Union still resolutely introducing the bill? Will this revenge set off a new round of fierce European and American trade disputes? And is the “digital tax” just a microcosm of the widening crack in Europe and the United States?

The European Union’s tough attitude is full of firepower.

Slighting small and medium-sized enterprises, global tax avoidance, hindering innovation, monopolizing markets… Some American Internet giants have attracted a series of attention.

Those industry giants have not only become “thorns in the side” of Congress in the United States, but also aroused vigilance in other slow-growing areas of the Internet in Europe. This time, the two bills introduced by the European Union around digital services are proof.

Source: thelocal france

Thierry, the EU Commissioner for Internal Markets, said: “This is related to the values of the EU and the future of the EU digital economy.”

In response, Ding Chun, director of the European Research Center of Fudan University and Professor Jean Monnet of the European Union, said that the European Union chose to be tough at this time for the following reasons:

First of all, it is based on the background of “globalization headwind”. Especially after the European debt crisis, EU countries have seen that American technology giants and some European countries have made a lot of money and become disgusted.

Secondly, because Europe is unwilling to leave economic sovereignty and economic rules to other countries. Europe’s digital economy is currently developing slowly and it is difficult to compete with the American Internet giants and the digital platforms they create. The weak EU is unwilling to accept this, let alone put its economic sovereignty and destiny under the control of the United States, so it wants to use the law to change all this.

In addition, the EU also wants to seize the delicate opportunity that the United States is still in the transition stage of old and new presidents to swear “economic sovereignty” and promote its own values. During the Trump administration, Europe and the United States had negotiated and frictions on issues such as “digital tax”. Until June this year, the United States unilaterally withdrew from the “international digital service tax” negotiations, and the two sides reached an impasse. The European Union chose to “fire” at this time to seize the threshold of the presidential handover and see how the next president will respond.

Europe and the United States have long been complaining about issues such as the collection of “digital taxes”, and the European Union has long targeted the American technology giants.

“Digital tax” is a kind of tax imposed by the European Union on large Internet companies. In July 2019, France decided to impose a digital service tax on some large multinational Internet companies, becoming the first country in the European Union to levy a digital tax.

In recent years, Internet companies such as Apple and Google have chosen to evade taxes by evading taxes by headquartered in “tax havens” countries such as Ireland and Luxembourg with loose tax systems and low tax rates. Considering that these enterprises have full revenue from operating in countries such as France and Germany, but enjoy low tax treatment, “digital tax” has emerged.

Xu Mingqi, president of the Shanghai European Society and vice chairman of the Shanghai International Economic Exchange Center, believes that “The EU’s approach is consistent with Europe’s concept of attaching importance to protecting local interests and privacy. Europe has no companies competing with the United States and technology giants. In addition, European governments have surged in spending due to the impact of the COVID-19 epidemic, and they also need to find a new tax base to cover the deficit.

Is a new round of trade war between Europe and the United States imminent?

After the enactment of the two bills, American Internet companies responded immediately.

Facebook warned that “more regulation may force them to move out of Europe, depriving EU people of a large number of jobs and access to relevant websites.”

According to AXIOS News Network, the EU began to increase its boycott of U.S. technology giants to oppose “America First” trade protectionism, and the EU’s approach may trigger a fierce trade war as Biden is about to take office as President of the United States.

European Commission President von der Leyen. Source: EURACTIV.com

Is the new round of trade war between Europe and the United States not far away?

Forecast 1: Trump quickly took retaliatory countermeasures.

At this time, when the President of the United States is handed over, there is not much time left for Trump. But Trump has always been dissatisfied with the EU in terms of “digital tax”. In his personality, the United States may quickly restart countermeasures in the short term, but this possibility still needs to be seen.

Forecast 2: It is hard to say whether Biden will take countermeasures after taking office.

After Biden takes office, there are many urgent problems to deal with, and the trade issue with the EU is not the main problem he has to face. Therefore, he may not “stitch-for-point” with EU countries like Trump, but will have a larger strategic perspective, and may want to rebuild allies with the EU, and Maintain close cooperation.

However, it is not ruled out that the pressure of American technology giants will have to counterattack. However, Biden will not respond quickly in the short term, and it is likely that the two sides will continue to negotiate and continue to bargain.

In fact, no matter whether the new round of European and American trade war is “triggered”, the digital tax dispute between Europe and the United States is a microcosm of the growing alienation of European and American relations.

Since Trump took office, he has been putting pressure on France and Germany and other European allies in economic and trade, defense, energy and other aspects. The two sides also have different ideas and fiercely collided on European integration, multilateralism and other issues. German Chancellor Merkel has repeatedly called for “Europe can no longer rely on the protection of the United States, and needs to take its fate in its own hands.”

In recent years, European countries have indeed translated “control of fate” into action, and the introduction of the Digital Bill may be one of them.

But it may be too early to assert whether it is really, as Le Monde said, “this is a huge turning point”.