How tech taxes became world’s hottest economic debate

WASHINGTON — A growing movement by foreign governments to tax American tech giants that supply internet search, online shopping and social media to their citizens has quickly emerged as the largest global economic battle of 2020.

The fight pits traditional allies against each other, with European countries like France, Italy and Britain clashing with the US over their plans to impose new taxes on digital services provided by companies like Amazon and Google.

At the core of the debate are fundamental questions about where economic activity in the digital age is generated, where it should be taxed and who should collect that revenue. The potential for large tax dollars has spurred governments across the world to consider new digital taxes and has even inspired lawmakers in some American states, like Maryland and New York, to propose their own levies on digital trade.

This week, national leaders meeting in Davos, Switzerland, brokered a truce between the US and France, which had planned to move ahead with a digital services tax. Officials in both countries said they would pause what had been an escalating dispute in order to give international negotiators a chance to reach a global tax agreement that could halt a proliferation of digital taxes.

But the meetings, which took place at the World Economic Forum, have also brought new threats of taxation and tariff retaliation and underscored how fragile negotiations remain.

The stakes are high for governments and multinational corporations — even those outside the tech sector. The digital tax negotiations, which are being conducted through the Organization for Economic Cooperation and Development, have become entwined with efforts to reduce attempts by companies to avoid taxes by shifting profits overseas.

Late last year, negotiators at the OECD, including a delegation from the Trump administration, agreed to a first-step framework that would allow countries to tax certain digital-service providers even if they did not have physical presences inside their borders.

But Treasury Secretary Steven Mnuchin quickly surprised OECD officials with a letter requesting a change to the framework, one that would effectively allow some U.S. companies to opt out of those taxes. OECD officials pushed back, and negotiators are set to meet again next week in Paris.

The discussions, which are expected to last months, could end with an agreement on a global minimum tax that all multinational companies must pay on their profits, regardless of where the profits are booked. The negotiations could also set a worldwide standard for how much tax companies must remit to certain countries based on their digital activity.

Mnuchin expressed frustration Thursday in Davos that a digital sales tax had become such a focus of discussion at the World Economic Forum. Setting a minimum tax for companies around the world, to prevent them from hiding profits in tax havens, will make a much bigger difference, he said.

“From my perspective, that is by far the more important,” he said.

There is a chance the talks could devolve into a “Wild West” array of separate tax regimes on digital activity around the world.

“It’s a big old mess,” said Jennifer McCloskey, vice president for policy at the Information Technology Industry Council, a trade group that represents companies including Apple, Oracle and several other American tech leaders. “But,” she added, “that’s to be expected.”

Companies that operate across borders have long paid taxes where their profits are booked. Calculating that sounds simple enough, but it has grown increasingly complicated in recent decades. To reduce their tax bills, corporations have shifted profits — and in some cases their headquarters — on paper to low-tax countries like Bermuda and Ireland. OECD countries like the US have agreed to measures meant to discourage such shifting.

Such efforts did not resolve some countries’ complaints about Facebook, eBay and other companies that offer online services to their residents but have little or no physical presence within their borders. Those governments, along with leaders of the European Union, say large tech companies are avoiding paying their fair share of taxes.

“They’re looking for new ways to raise revenue,” said Nicole Kaeding, an economist and vice president of policy promotion at the National Taxpayers Union Foundation, which opposes the digital tax push by countries and states. “These are all wrapped up in the questions of how do we adjust a tax system that is a hundred years old in order to tax the digital economy?”

Kimberly Clausing, an economist at Reed College in Portland, Oregon, who specializes in international taxation and has pushed for additional measures to tax corporate profits around the world, said the digital tax effort exposed political and economic tensions in wealthy nations.

“It really lays bare this fiction that economic value is something we can assign to a location,” Clausing said. “As more and more of the value is intangible, it really creates this opportunity for profit-shifting.”

The proliferation of profitable digital services makes it “really the time” for the international community to revisit the rules of corporate taxation across borders, she said.

The feud between French and US officials has sped up the OECD process to rewrite those rules, which has a deadline for completion at the end of this year.

France announced plans last year to impose a 3 percent tax starting Jan. 1 on the revenues that companies earn from providing digital services to French users. The government estimated a windfall of 500 million euros (about $563 million). Similar taxes are under consideration in Britain, Italy, Canada and a host of other wealthy nations.

Those moves have drawn criticism, and tariff threats, from the Trump administration. President Donald Trump has insisted that only the US may tax American-based companies — even though American multinationals already pay taxes in other countries where they have factories or other physical operations. The president threatened to retaliate against France with US tariffs of up to 100 percent on French wine, cheese, handbags and other goods.

This week, Mnuchin also threatened tariffs against Italy and Britain if they impose similar taxes. British Chancellor Sajid Javid, who is also in Davos, said Britain would push ahead with the tax regardless.

Despite the acrimony, there are signs of progress. France’s finance minister, Bruno Le Maire, said Wednesday that the US and France had found a path forward in the OECD negotiations to set digital taxes.

The French agreed to suspend collections of their new digital tax, and the US agreed to hold off on tariffs, giving negotiators at the OECD time to strike their deal.

Le Maire made clear that the digital tax issue was far from resolved, and talks were expected to continue Thursday.

“We need to address fiscal evasion,” he said. “We have to address the fact that the biggest companies in the world are making huge profits in Europe and everywhere in the world without paying the due level of taxation because they do not have any physical presence — we have to address that question.”

Some observers are skeptical that the process can produce consensus — from some 130 countries — by year’s end.

“Some countries are going to have to give up taxing rights in order to allow other countries to have them. And the question is: Who?” said J. Clark Armitage, a former IRS official and the president of the tax firm Caplin & Drysdale in Washington. “It’s going to be hard to pass something that tracks what they propose.”

Negotiators face intense and competing pressures from large multinational companies. American tech firms are eager for a deal that would prevent multiple countries from imposing a wide variety of taxes on their activities.

“The worst case would be triple, quadruple taxation, because of how the individual taxes are not aligned,” said Jordan Haas, trade director for the Internet Association, another tech trade group in Washington.

Other companies, like consumer products giant Johnson & Johnson, have urged negotiators to go slow in considering the global minimum tax proposal that the OECD is discussing — and that French officials say must be included in any final agreement.

EU officials are already looking at reviving their own proposal to significantly revamp how the companies are taxed in the 28-nation bloc in the event that the OECD discussions fail. On Wednesday, an EU official said leaders were waiting to see whether Trump administration negotiators engaged more aggressively in the discussions and showed a willingness to work with Congress to carry out any consensus solution that emerged from the talks.

“We’re pleased” with the progress announced in Davos, the official said. “At the same time, we’re skeptical.”


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France fights back over US tariff threat to champagne, cheese

PARIS/LONDON -- France and the European Union said on Tuesday they were ready to retaliate if US President Donald Trump acted on a threat to impose duties of up to 100 percent on imports of champagne, handbags and other French products worth $2.4 billion.

The threat of punitive tariffs followed a US government investigation that found a new digital services tax in France would harm US technology companies, and will intensify a festering trade dispute between Europe and the United States.

In London for a NATO summit, Trump and French President Emmanuel Macron exchanged a tight-gripped handshake before both said they hoped they could smooth out their differences over the digital services tax.

"They're American companies. They're tech companies. They're not my favorite people, but that's OK, I don't care, they're American companies. And we want to tax American companies. It's not for somebody else to tax them," Trump said.

"So it's either gonna work out, or we'll work out some mutually beneficial tax," he said, referring to the levy threat. "And the tax will be substantial. I'm not sure it's gonna come to that, but it might."

The spat marks a new low in testy relations between Trump and Macron, who have been at odds over the American's unilateralist approach to trade, climate change and Iran.

On Tuesday, US Commerce Secretary Wilbur Ross said the French tax was a "very radical notion, putting a tax on revenues as opposed to a tax on earnings" and was aimed at raising French revenues to aid its budget deficits.

"Other countries would do better to try to develop their own technology, rather than to try to penalize American companies for their successes," he told Reuters in New York, adding it was a "strange and maybe dangerous" practice to tax revenue rather than income.

Earlier on Tuesday, Trump criticized European allies, singling out Macron for his "very nasty" comments portraying the NATO alliance as "experiencing brain death".

Macron's finance minister called the tariff threat unacceptable and said the EU was primed to respond if the United States imposed the new tariffs.

The European Commission, the EU executive, said the 28-nation EU would act as one and that the best place to settle disputes was at the World Trade Organization.

"I am determined to defend the interests of my country and of Europe," Macron said, seated next to Trump.

The United States has already imposed 25-percent duties on French wine and cheese as part of its WTO-sanctioned response to illegal EU aircraft subsidies, a move exporters said would penalize US consumers while severely hurting French producers.

INTERNATIONAL SOLUTION

France's 3-percent levy applies to revenue from digital services earned by companies with more than 25 million euros ($27.86 million) of revenues from France and 750 million euros worldwide.

An investigation by the US Trade Representative's office found the French tax was "inconsistent with prevailing principles of international tax policy".

It said the tax was "unusually burdensome" for US companies including Alphabet Inc's Google, Facebook Inc, Apple Inc and Amazon.com Inc.

France is not alone in targeting big digital companies; a growing number of other countries are preparing their own taxes.

Governments, including Washington, are frustrated that big digital companies can book earnings in low-tax countries such as Ireland regardless of where the end client is.

France says it will drop its digital tax as soon as an agreement is found at the Organisation for Economic Cooperation and Development to overhaul decades-old international tax rules.

FRENCH LUXURY STOCKS FALL

Shares in French luxury companies fell in response to the tariff threat against French champagne, handbags, cheeses and other products.

Hermes was around 2.8 percent lower, while LVMH and Kering fell 1.7 percent and 2.8 percent respectively. Champagne maker Vranken Pommery was down by 2.4 percent.

French products will not face tariffs immediately as the US Trade Representative still intends to gather public comments and hold a public hearing in January.

Based on past experience of Section 301 tariffs, primarily applied to Chinese goods, France would face punitive tariffs in two or three months.

Any retaliatory action from France would have to be taken at an EU-wide level because the bloc is a customs union which applies duties at its border.

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Journalists urge action against Google over EU copyright dispute

PARIS — Hundreds of journalists called Wednesday for European officials to take action against Google over its refusal to pay media companies for displaying their content in defiance of a strict new EU copyright law.

France was the first country to ratify the law, which was passed this year and comes into force on Thursday to ensure publishers are compensated when their work is displayed online.

But Google said last month that articles, pictures and videos would be shown in search results only if media firms consent to let the tech giant use it for free.

If they refuse, only a headline and a bare link to the content will appear, Google said, almost certainly resulting in a loss of visibility and potential ad revenue for the publisher.

Around 800 journalists as well as photographers, filmmakers and media CEOs signed an open letter published in newspapers across Europe urging governments to ensure that Google and other tech firms comply with the new EU rule.

"The law risks being stripped of all meaning before it even comes into force," the letter said, calling Google's move "a fresh insult to national and European sovereignty".

"The existing situation, in which Google enjoys most of the advertising revenue generated by the news that it rakes in without any payment, is untenable and has plunged the media into a crisis that is deepening each year," it said.

The presidents of the European Alliance of News Agencies and the European Newspaper Publishers' Association also signed the letter.

'CATASTROPHE' 

Google has countered that it benefits news publishers by sending more than 8 billion visits to their websites each month in Europe alone.

"We don't pay for links to be included in search results" because "it would undermine the trust of users," Richard Gingras, Google's vice president in charge of news, said in Paris last month.

But news publishers, including AFP, say such links to their websites are unable to help them cope with plummeting revenues as readers migrate online from traditional media outlets.

French President Emmanuel Macron has said Google will have to comply with the law, and the European Commission said it stands ready to assist member states, which must translate into domestic legislation by June 2021.

The new rules create so-called neighboring rights to ensure a form of copyright protection -- and compensation -- for media firms when their content is used on websites such as search engines or social media platforms.

"Now that disinformation campaigns are infecting the internet and social networks, and independent journalism is under attack in several countries within the European Union, surrendering would be a catastrophe," said the open letter.

"We call on the public decision-makers to fight back."

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Macron: Google can't escape copyright laws

Google cannot escape French law obliging the US online giant to pay royalties to media outlets for displaying their articles, pictures and videos in search results, French President Emmanuel Macron said Friday.

Google routinely shows extracts of news articles or small "thumbnail" images in its results and on Google News, without paying the publishers.

A new EU rule, which France is the first to implement, requires internet companies to pay for such content.

Google has baulked, saying it will not use the content in search results unless publishers make it available for free.

But Macron criticized Google's operations in France and Germany and said that "the desire of an operator today is not to pay the newspaper, not to pay the journalists". 

"A company, even a very large company, can not get away with it when it decides to operate in France," the French president insisted, during a visit to mark the centenary of the La Montagne newspaper in the city of Clermont-Ferrand in central France.

"We are going to start implementing the law," he said.

The new European legislation, which comes into force on October 24, seeks to ensure media firms are paid for original content displayed by Google, Facebook and other technology giants which dominate the online advertising market.

The new rules create "neighboring rights" to ensure a form of copyright protection -- and compensation -- for media firms when their content is used on websites such as search engines.

However on September 25, Google said it had no intention of paying European media outlets. 

"It's up to the publishers to decide how they promote their content," Richard Gingras, Google's vice president in charge of news, told journalists in Paris then, after meeting French Culture Minister Franck Riester. 

At Google, he added, "we don't pay for links to be included in search results" because "it would undermine the trust of users".

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France may face sperm shortage under Macron plan to ease IVF rules

PARIS—France risks a shortage of frozen sperm if lawmakers approve new legislation that allows single women and lesbian couples access to in-vitro fertilization (IVF) and abolishes the right of sperm and egg donors to keep their identities secret, clinicians said.

Lawmakers in the country's National Assembly on Tuesday start debating a bioethics bill that unwinds some of western Europe's strictest rules governing medically-assisted pregnancies, a campaign promise of President Emmanuel Macron.

Under existing law in France, IVF is available only to opposite-sex couples, and only for reasons of infertility or the risk of transmission of a disease or medical condition to the child or either parent.

Health Minister Agnes Buzyn forecasts a roughly two-thirds increase in demand for IVF procedures, with an extra 2,000 women annually registering for treatment.

Couples already wait an average of 12 months from registration to their first attempt at IVF. Clinicians at France's network of public sperm banks (CECOS) said the supply of cryopreserved sperm only just meets demand.

Moreover, they predict lifting donor anonymity could prompt three-quarters of registered male and female donors to deny clinics the use of their sperm and eggs under the new rules.

"To say 'everything is going to be ok' would be burying your head in the sand," Nathalie Rives, president of the CECOS federation, told Reuters.

"There will be a period of instability, with increased demand and the need to recruit new donors. We don't know how long this instability will last and whether there will be a shortage."

The bioethics bill, which would also allow women to freeze their eggs for non-medical reasons to enhance their chances of having children, is Macron's first major societal reform.

Medically assisted reproduction—such as IVF—is widely available to all women in countries such as Britain, Belgium and Spain. But in France, it has fed into a broader debate about the commercialization of healthcare and gay rights.

"The right to know one’s origins is a vital right, a fundamental right,” said Arthur Kermalvezen, 35, who turned to DNA tests to track down his biological father and has campaigned for the lifting of anonymity.

The legalization of gay marriage in France 6 years ago sparked massive street protests even though the influence of the Catholic Church was thought to be in decline.

In a sign France has become more socially liberal, polls show a majority of French people back the bioethics reform.

Professor Rachel Levy, who runs the CECOS center at the Tenon Hospital in Paris, said donor anonymity would remain in place for 13 months after the legislation comes into effect in an effort to help sperm banks build up stocks.

There would then be a second phase during which existing donors would say if they consent to their cryopreserved sperm being used under the new rules. The samples of those who refuse will be destroyed later.

"It's a challenging situation," Levy said.

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Bad hair day at the summit

Britain's Prime Minister Boris Johnson meets U.S. President Donald Trump for bilateral talks during the G7 summit in Biarritz, France on Sunday. Leaders of the world's top economies met in France over the weekend to discuss issues ranging from the Iranian nuclear crisis to trade, and fires in the Amazon.

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Brazilian women must be ashamed of Bolsonaro for mocking my wife, says Macron

BIARRITZ, France - Brazilian women are probably ashamed of President Jair Bolsonaro, French President Emmanuel Macron said on Monday, hitting back after the Brazilian leader mocked Macron's wife on Facebook.

The leaders have been feuding in recent weeks, with Macron blaming Bolsonaro for fires in the Amazon and accusing him of lying about climate change policy.

Bolsonaro responded on Sunday to a Facebook post that compared the looks of his wife Michelle, 37, with Macron's 66-year-old wife Brigitte.

"Do not humiliate the man hahahah," Bolsonaro wrote, in a comment widely criticized as sexist.

Asked about the incident at a news conference in Biarritz where G7 leaders are gathered for a summit, Macron said the comments were "extremely disrespectful" to his wife.

"It's sad, it's sad first of all for him and for Brazilians," Macron said. "Brazilian women are probably feeling ashamed of their president."

"Since I have a lot of esteem and respect for the people of Brazil, I hope they will very soon have a president who is up to the job," Macron added.

Later on Monday, Bolsonaro denounced Macron's plan for an international alliance to protect the Amazon, saying on Twitter that it would treat Brazil like a colony.

Brazil was angered after Macron, in the run up to the G7 summit, tweeted a photo of the burning Amazon forest, writing: "Our house is burning. Literally." Macron said he had been lied to by Bolsonaro over his commitments to fighting climate change.

In July, Bolsonaro cancelled a meeting with French Foreign Minister Jean-Yves Le Drian - getting a haircut instead.

Since taking office in January, Bolsonaro has railed against the enforcement of environmental regulations in Brazil and announced intentions to develop the Amazon region, where deforestation of the world's largest rainforest by loggers, ranchers and speculators has surged this year. 

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US, France reach agreement on digital taxes

French President Emmanuel Macron said Monday G7 members had reached an agreement on the taxation of tech giants, a long-standing subject of friction between France and the US which has threatened to retaliate with tariffs on French wines.

Speaking alongside US President Donald Trump at a G7 summit in southwest France, Macron admitted that there had been "a lot of nervousness" about France's new tax on tech behemoths such as Google and Facebook.

But negotiations between France and the United States had produced "what I think is a very good deal," he said.

Macron explained that France would scrap its own digital tax once a new international levy being discussed among 134 OECD countries is in place. France hopes it will be ready in 2020.

Asked whether he would now rescind his threat to slap punitive retaliatory tariffs on French wines, Trump, who had described the French tax as "very unfair", was non-committal.

His wife Melania "loves the French wine", he joked.

The US leader, who was elected on a protectionist platform, had earlier announced that Paris and Washington were "close" to a deal.

"They want to make a deal and we'll see if we can make a deal," Trump said.

REIMBURSE EXCESS TAX

The French parliament passed its new levy in July amid frustration at the slow pace of negotiations on a new global accord to ensure tech multinationals pay a larger share of taxes on their operations.

Under EU law, American tax giants can declare their profits from across the bloc in a single jurisdiction -- in most cases low-tax jurisdictions such as Ireland or the Netherlands.

The French tax, which targets local sales rather than profits, has drawn accusations of discrimination from the so-called GAFA companies (Google, Apple, Facebook and Amazon).

It is expected to add 400 million euros ($444 million) to France's coffers this year, rising to 450 million in 2020.

Under the agreement struck in Biarritz, French tax authorities will look at how much companies paid in French "GAFA" taxes and how much they would have paid under the yet-to-be-decided international formula, French Economy Minister Bruno Le Maire told AFP.

"Everything that is paid in excess compared to the international solution will be credited to the company," he added.

Britain has also announced plans for a tax on tech giants, accused of exploiting fiscal rules to sharply cut their tax bills despite soaring profits.

"Frankly, we must do something to tax fairly and properly the online businesses that have such colossal sales in our country," British Prime Minister Boris Johnson said ahead of talks with Trump in Biarritz on Saturday.

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French police fire tear gas, water cannons at anti-G7 protesters

BAYONNE, France - French riot police used water cannons and tear gas on Saturday to disperse anti-capitalism protesters in Bayonne, near the resort of Biarritz where President Emmanuel Macron and G7 nation allies were meeting for a 3-day summit.

A police helicopter circled as dozens of protesters, some hurling stones, shouted slogans and abuse at the lines of police in the Basque town's historic center.

The protesters shouted "Everybody hates the police" and "anti, anti anti-capitalists" as the mood took a darker turn from peaceful protests earlier in the day in an authorized march on the French-Spanish border.

Roiled by months of anti-government protests this year, France has deployed more than 13,000 police to ensure protesters get nowhere near US President Donald Trump and other leaders. Authorities designated 2 counter-summit "villages" and the morning protest about 30 km (19 miles) from the summit.

Thousands of anti-globalization activists, Basque separatists and "yellow vest" protesters walked from the French town of Hendaye to Irun in Spain, waving banners calling for climate action, gay rights and a fairer economic model.

"The top capitalist leaders are here and we have to show them that the fight continues," said Alain Missana, 48, an electrician wearing a yellow vest - symbol of the anti-government demonstrations that have been held in France for months.

"It's more money for the rich and nothing for the poor. We see the Amazonian forests burning and the Arctic melting. The leaders will hear us," he said.

Four police officers were lightly wounded on Friday after protesters fired a homemade mortar near the anti-G7 gathering in Hendaye. Police arrested 17 people for hiding their faces.

Activists in the counter-summit villages have this week united from France, the Basque region straddling the French-Spanish border and beyond to confront a rich-poor divide they say is growing due to the cynicism of world leaders.

"The counter-G7 demonstration is in this Basque region and we want people to see we are part of it," said Alfredo Akuna, a 46-year-old engineer from San Sebastián in northern Spain who wore traditional Basque clothing.

"We're involved in many movements including anti-capitalism and anti-fascism so it's important to be here to show that." 

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Global disputes likely to thwart unity at G7 summit in France

PARIS - Leaders of the G7 nations arrive in France on Saturday for a summit as a brewing US-China confrontation over protectionism highlighted President Emmanuel Macron's tough task in delivering meaningful results on trade, Iran and climate change.

The 3-day meeting in the Atlantic seaside resort of Biarritz takes place amid sharp differences over a clutch of global issues that risk further dividing a group of countries already struggling to pull together.

Summit host Macron wants the leaders of Britain, Canada, Germany, Italy, Japan and the United States to focus on the defense of democracy, gender equality, education and climate change, and has invited leaders from Asia, Africa and Latin America to join them for a global push on these issues.

But with the trade war between China and the United States escalating, European governments struggling to defuse tensions between Washington and Tehran and global condemnation growing over illegal fires in the Amazon, his agenda could be eclipsed.

US President Donald Trump's history of pugnacity at multilateral gatherings, which brought last year's G7 summit to an acrimonious conclusion, means there is scant hope for substantive agreements. France has already decided that, to avoid another failure, there will be no final communique.

"French President Emmanuel Macron... bills the meeting as a chance to relaunch multilateralism, promote democracy and tame globalization to ensure it works for everyone," Stewart Patrick of the Council on Foreign Relations wrote.

"More likely, the gathering will expose the political, economic and ideological fault lines threatening Western solidarity and international cooperation."

Trump's walkout at the Charlevoix summit in Canada last year prompted foreign policy observers to dub the Group of Seven nations the G6+1.

US officials said Trump would tout his policies of tax cuts and deregulation and press allies to follow his example to stave off problems with the global economy.

Hours before leaving for Biarritz, Trump reacted angrily to China's move to impose retaliatory tariffs on more US goods, even saying he was ordering US companies to look at ways to close their operations in China. The president cannot legally compel US firms to abandon China immediately.

"Our Country has lost, stupidly, Trillions of Dollars with China over many years," Trump tweeted. "We don't need China and, frankly, would be better off without them."

China's President Xi Jinping is not among the Asian leaders invited to the Biarritz summit.

JOHNSON'S WORLD DEBUT

Adding to the unpredictable dynamic between the G7 leaders are the new realities facing Brexit-bound Britain: dwindling influence in Europe and growing dependency on the United States.

New Prime Minister Boris Johnson will want to strike a balance between not alienating Britain's European allies and not irritating Trump and possibly jeopardizing future trade ties. Johnson and Trump will hold bilateral talks on Sunday morning.

Even so, diplomats played down the likelihood of Trump and Johnson joining hands against the rest, citing Britain's close foreign policy alignment with Europe on issues from Iran and trade to climate change.

"There won't be a G5+2," one senior G7 diplomat said.

Johnson said ahead of the summit that Britain would not retreat from its responsibilities on the world stage after Brexit, nor sacrifice its belief in the global order.

The remarks were a riposte to those who say leaving the European Union will diminish Britain's influence on the global stage and force a pivot towards Trump's unorthodox and often confrontational approach to diplomacy.

France will deploy more than 13,000 police officers, backed by soldiers, to keep protesters away from the summit venue.

Macron will host a dinner on the waterfront on Saturday before the leaders get down to talks on Sunday and Monday on the global economy, tackling inequality and climate change.

EU leaders on Friday piled pressure on Brazilian President Jair Bolsonaro over fires raging in the Amazon rainforest.

Macron said Bolsonaro had lied in playing down concerns about climate change at a G20 summit in Japan in June, and threatened to veto a trade pact between the European Union and the Mercosur bloc of South American countries.

Greenpeace called the deforestation an emergency that highlighted the G7 leaders' need to act on ending fossil fuels and protecting forests.

"Once again, Emmanuel Macron is making bold statements which have yet to be matched by actions," said Greenpeace France Executive Director Jean-François Julliard.

"France and other developed countries are responsible for the dire Amazon situation through their economies and contribution to imported deforestation, fueled by ill-designed policies in sectors like agriculture, timber and bio-energies."

A French diplomatic source said advisers to the G7 leaders were working on concrete initiatives to respond to the fires.

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Major fashion companies to make G7 pledge to help environment

PARIS - Major fashion companies from around the world said on Friday they had signed a pact which they would present at this week's G7 summit to help protect the environment.

The pact has been signed by 32 companies including the likes of Adidas, Burberry, Kering, Hermes, LVMH and Nike.

Protecting the environment will be a leading issue at the G7, with French President Emmanuel Macron and United Nations Secretary General António Guterres having expressed concern this week over wildfires raging through the Amazon.

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EXPLAINER: France's Macron seeks international tax on digital services

PARIS -- French President Emmanuel Macron is pressing ahead with a digital tax in France, a move US President Donald Trump described as "foolishness", and the French leader is keen to reach an international agreement on taxing big tech companies.

Late on Wednesday, Macron urged the Trump administration to help reform global corporate taxes.

Macron will seek common ground with Trump and other G7 leaders at a summit in Biarritz this weekend. Washington has expressed concern that US Internet companies are being unfairly targeted.

Here is a guide to the digital tax debate.

WHAT IS A DIGITAL TAX?

The governments of large European countries have been vexed by their inability to tax the profits of multinational tech companies that they believe are derived in their jurisdictions.

Internet giants such as Facebook, Google and Amazon are currently able to book profits in low-tax countries like Ireland and Luxembourg, no matter where the revenue originates.

Macron says taxing big tech more is a matter of social justice.

The French leader pushed hard for a digital tax to cover European Union member states, but ran up against resistance from Ireland, Denmark, Sweden and Finland.

WHAT HAS FRANCE DONE?

After talks on an EU digital tax foundered, Macron's government imposed its own unilateral tax.

The 3 percent levy applies to revenue from digital services earned by firms with more than 25 million euros in French revenue and 750 million euros ($830 million) worldwide.

Paris is not alone among European capitals in proposing a tax on big tech. Britain, Spain, Italy and Austria have also announced plans for their own digital levies.

WHAT DOES MACRON WANT TO ACCOMPLISH AT THE G7?

The goal now is to secure a broader agreement under the auspices of the G20 and the OECD. Macron wants G7 leaders to agree on the principle of a universal tax to provide impetus to this effort.

G20 finance ministers agreed in June to compile common rules to close tax loopholes and promised to "redouble efforts" for a consensus-based solution to be found by 2020.

G7 finance ministers agreed the following month that there should be a minimum level of tax to discourage countries from competing in a "race to the bottom".

"Now the G20 is set to discuss this issue further, there's not much left for the G7 to do," a Japanese government official said. "We (Japan) are hoping to keep in step with France. But that doesn't mean the G7 will decide anything new at this summit."

WHAT OBSTACLES LIE IN THE WAY?

Trump. The US president has already lambasted Macron's "foolishness" for pursuing a French digital levy and has threatened to tax French wines in retaliation.

The row illustrates how digital taxation could open up a new front in the trade spat between Washington and the EU as economic relations between the two appear to sour.

Trump's threat to punish France should not be taken lightly. It followed US Trade Representative Robert Lighthizer's office announcing an investigation into the French tax, which it called an unfair trade practice that penalised US tech companies for their commercial success.

Low-tax jurisdictions also have misgivings about Macron's tax plan because it would make it harder for them to attract foreign direct investment with the promise of ultra-low corporate taxes.

source: news.abs-cbn.com

Blow for Macron as Le Pen tops EU election in France

PARIS -- The far-right National Rally party led by Marine Le Pen finished top in European elections in France, final results showed Monday, dealing a symbolic blow, but not a knock-out punch, to pro-EU President Emmanuel Macron.

Le Pen's National Rally (RN) received 23.31 percent of the vote, with Macron's centrist alliance trailing with 22.41 percent.

The two groups will have the same number of seats in the European Parliament, 23, after Britain's expected departure from the EU.

Le Pen, who lost out to Macron in a bitter presidential contest in 2017, called for the head of state to dissolve the parliament and call new elections, a proposal that was immediately rejected by the government.

"It is up to the president of the republic to draw conclusions, he who put his presidential credit on the line in this vote in making it a referendum on his policies and even his personality," Le Pen said in a brief speech late Sunday.

But despite triumphalist comments from RN figures, the final results were a mixed picture for the 50-year-old Le Pen: her party ended up losing ground since European elections in 2014 when it finished top with 24.9 percent.

In a first reaction after exit polls were released late on Sunday, an aide to Macron called them "respectable". Leading allies of the 41-year-old president sounded satisfied that the margin of defeat looked like it would be slender.

A second-place finish for the ruling Republic on the Move (LREM) party was a disappointment for Macron after he put his reputation on the line by campaigning, but it is a symbolic setback that aides said would have no bearing on his policies.

"The catastrophe that some people predicted for Macron has not taken place and the RN has a significant score, but not a spectacular one when you compare it to five years ago," analyst Zaki Laidi from the Cevipof political institute said.

'TIME FOR ACTION'

An aide to Macron, speaking to AFP on condition of anonymity, said that there would be "no change of line" and that he would intensify his planned reforms which include tax cuts for the middle classes and controversial changes to the pension and unemployment benefits system.

Prime Minister Edouard Philippe said the results confirmed the "redrawing" of French politics, which was evident in the presidential election in 2017 when France's traditional parties were eclipsed by Macron's new centrist movement and the far-right.

"The time is for action because the French people will judge us ultimately on one thing: results," Philippe said in a televised statement on Sunday.

He also said the government had "received a message about the ecological emergency" after France's main green party, EELV, looked set to finish third, with around 13 percent of the vote compared with 8.9 percent in 2014.

Macron had made no secret of the significance he attached to the results, telling regional French newspapers last week that the EU elections were the most important for four decades as the union faced an "existential threat".

He is a leading champion of further EU integration and is keen for further advances to link the economies, militaries and political systems of the bloc, which numbers 28 member states including Britain.

At home, the former investment banker started his 5-year term as an energetic pro-business reformer intent on cutting unemployment and making France more entrepreneurial.

But for 6 months he has faced so-called "yellow vest" protesters who have blocked roads and demonstrated to denounce him as a "president of the rich" who has ignored the plight of the working poor and rural France.

Macron has since announced major tax cuts for the middle classes and a rise in the minimum wage.

ALLIES?

His influence and Le Pen's in the European parliament will now depend on whether they can make alliances.

Le Pen has previously called for the formation of a "supergroup" of eurosceptic parties, but the hard-right ruling party in Poland -- PiS -- has shunned her because of her pro-Russian views, while Hungary's Prime Minister Viktor Orban remains aloof.

"The gains for our allies in Europe and the emergence of new forces across the continent... open the way for the formation of a powerful group in the European parliament," the RN's top campaigner, 23-year-old Jordan Bardella, told supporters on Sunday.

Macron meanwhile is in alliance with the ALDE centrist and liberal grouping which is seen as finishing third in the parliament behind the conservative PPE formation and the center-left Socialists and Democrats (S&D).

But the French president, who redrew French politics in 2017, is still hoping to forge a new broader alliance of pro-European which would bring together so-called "progressives."

"At the European level, the president is still maneuvering to form a large progressive alliance, a force that will be essential in the new parliament," an aide said on condition of anonymity.

source: news.abs-cbn.com

Tension palpable as thousands hit Paris for May 1 rallies

Paris riot police fired teargas as they squared off against hard-line demonstrators among tens of thousands of May Day protesters, who flooded the city Wednesday in a test for France's zero-tolerance policy on street violence. 

Tensions were palpable as a heady mix of labor unionists, "yellow vest" demonstrators and anti-capitalists gathered in the French capital, putting security forces on high alert. 

Ahead of the main march, the city was on lockdown with more than 7,400 police and gendarmes deployed with orders from President Emmanuel Macron to take an "extremely firm stance" if faced with violence. 

Clashes briefly erupted on Montparnasse Boulevard, where hundreds of anti-capitalist "black bloc" activists pushed to the front of the gathering crowd, hurling bottles and other projectiles at police, who fired tear gas and stingball grenades, an AFP correspondent said.

Used at ground level, the grenades release scores of rubber pellets that cause an intense stinging to the legs. 

Authorities had warned this year's marches would likely spell trouble, coming barely a week after leaders of the yellow vest anti-government movement angrily dismissed a package of tax cuts by Macron.

And with some agitators vowing on social media to turn Paris into "the capital of rioting", the government moved to deploy security on an "exceptional scale" throughout the capital.

Last year, officials were caught off guard by some 1,200 troublemakers who ran amok in Paris, vandalizing businesses and clashing with police.

By early afternoon, thousands had flocked to the Montparnasse area, many wearing the hi-visibility jackets that gave the name to the yellow vest protesters.

Since November, the city has struggled to cope with the weekly yellow vest protests, which have often descended into chaos with a violent minority smashing up and torching shops, restaurants and newspaper stands.

Across the city on Wednesday, streets were barricaded and shops had boarded up their windows, with police ordering the closure of all businesses along the route of the main march. 

"We are not afraid of the union marches but of the black blocs," local restaurant owner Serge Tafanel told AFP. 

- 'Capital of rioting' -

Interior Minister Christophe Castaner said several groups on social media had urged protesters to transform Paris into "the capital of rioting", with police gearing up for the arrival of up to 2,000 activists bristling for a fight.

Many are anti-capitalist youths, often known as black blocs, who dress in black and wear face masks.

Nearly 200 motorcycle units have been deployed across the capital to respond quickly to flare-ups of violence, and drones are being used to track protesters' movements.

Castaner said police would carry out preemptive searches of anyone planning to march, a new tactic allowed under a security law passed recently in response to the yellow vest violence.

From the early hours of Wednesday, several dozen police officers could be seen at the city's main train stations, carrying out bag random searches, AFP journalists said.

By midday, police said 88 people had been detained for questioning. 

- Sidelined, unions seek visibility -

Last Thursday, in a major policy speech aimed at calming the yellow vest anger, Macron promised a string of reforms including tax cuts worth 5 billion euros ($5.5 billion).

The yellow vests rejected it as too little, too late, pledging to keep up the protests, which began last year over rising taxes on fuel and pensions but have since morphed into a wider movement. 

Although the numbers have steadily fallen, the rallies have remained in the headlines, largely over disorder by a handful of violent protesters along the Champs-Elysees.

Following a particularly violent demo in March, the government adopted a "zero-tolerance" approach, passing an "anti-rioter" bill which included making it a criminal offense to wear a mask at a protest. 

France's powerful labor unions are also hoping to use the traditional May Day march for workers' rights to raise their profile after finding themselves sidelined for months by the grass-roots yellow vest movement. 

Like the yellow vests, the unions were also disappointed by Macron's speech. 

"We must be careful not to lose the meaning of this day," warned Philippe Martinez, secretary general of the CGT, one of France's biggest unions. 

"It is a day of mobilization which deserves our full attention after Emmanuel Macron's announcement in which he said: 'I hear you and I'm not changing anything'."

source: news.abs-cbn.com

10,000 march in Paris against 'yellow vest' violence

PARIS - More than 10,000 people marched through Paris on Sunday in protest at "yellow vest" violence during the anti-government demos that have drawn tens of thousands of people to the streets over the past 11 weeks.

Since mid-November President Emmanuel Macron has offered concessions and debates seeking to quell the weekly rallies that often end in violent clashes with police in the most serious challenge yet to his government.

In Sunday's rival protest, the crowds marched in rain from the Place de la Nation square to the Bastille monument, some chanting "Yes to democracy, no to revolution" as they waved French and European Union flags.

Dubbed the "red scarf" movement, the centrist initiative is the brainchild of an engineer from Toulouse who was horrified by the violence seen among more extremist "yellow vest" demonstrators.

Many protesters joining the rally said they were not against "yellow vest" demands for greater help for France's poor, but were sick of the clashes and destruction that have marked protests.

A nursing manager who gave her name as Marie-Line said she believed the yellow vests had just cause to "grumble", but came "to say that this verbal and physical violence must stop".

"It's not a protest against the yellow vests -- it's a protest to say, you've made your demands, we are listening to them," Francois Patriat, a senator from Macron's centrist party, told AFP at the demonstration.

"There are other places to discuss this than the street. You cannot block the country and economy because you consider the president to be illegitimate."

Sunday's protest was almost double the size of the "yellow vest" demonstration in Paris a day earlier, when some 4,000 people came out to rail against Macron.

The protesters are named after the luminous road safety vests that they wear.

Originally sparked by rises in fuel taxes, the movement quickly snowballed into a widespread revolt over accusations the president, an ex-banker, is out of touch with rural and small-town France.

But their numbers have ebbed in recent weeks after Macron announced a series of policy climbdowns and launched a two-month consultation to allow people to vent their anger.

PROMINENT 'YELLOW VEST' HURT

Saturday's protest in Paris saw a prominent "yellow vest" activist, Jerome Rodrigues, badly injured. Both Rodrigues and his lawyer Philippe de Veulle said he was hit in the eye by a police rubber bullet, an anti-riot weapon that has become highly controversial in France.

"He is in shock. He will be handicapped for life. It is a tragedy for him and his family," de Veulle told BFM television.

Rodrigues, a construction worker, was placed in an artificial coma overnight after the incident at the Bastille monument on Saturday afternoon.

The 40-year-old, who has 50,000 followers on Facebook, was live-streaming the protest on the website when he was hit.

De Veulle said Rodrigues was struck in the eye with a "flashball", referring to the 40-mm (1.6-inch) rubber projectiles used by French riot police.

Later Sunday Rodrigues told reporters he would remain in hospital for a further five days, adding that only time would tell if his vision had been damaged.

He said he had agreed with Eric Drouet, another leading figure in the movement, to launch a "call for calm" while at the same time pressing on and strengthening the protests "without violence".

"I will not stop, I will be back at the demonstrations as soon as my health permits me," he said.

Junior Interior Minister Laurent Nunez on Sunday told LCI television there was "no evidence" to show Rodrigues was hit by a police rubber projectile. Investigations were still looking into the incident.

The devices -- which are not used in most European countries -- have been blamed for dozens of serious injuries at "yellow vest" protests, leading to calls for them to be banned.

On Saturday, police using the weapons were for the first time deployed wearing body cams in a bid to increase transparency.

Rodrigues' lawyer insisted his client was not one of the "hooligans" who have been joining the weekly protests to cause trouble for police.

In the video, Rodrigues can be heard several times warning protesters to leave the Bastille area because hard-left "black bloc" agitators were coming to attack the police.

Witnesses picked up the projectile that struck Rodrigues and police are investigating the circumstances of the incident.

source: news.abs-cbn.com

Yellow vests' back on France's streets to challenge Macron

PARIS - Thousands of "yellow vest" protesters returned to the streets of France Saturday to protest against President Emmanuel Macron's policies, clashing with police in several cities in a challenge to his bid to quell the movement.

Police fired tear gas and water cannon to push back protesters at Place de la Bastille in Paris, one of the regular protest sites, as some demonstrators threw stones from a building site.

The local prefecture reported 223 arrests in Paris.

The interior ministry estimated numbers for the 11th week of protests were at 69,000 across France, compared to 84,000 last Saturday.

In Paris, the official count was 4,000 demonstrators against 7,000 the previous weekend.

Clashes erupted too in western France in Nantes and Evreux and in the southern city of Montpellier, where a police officer was injured by "a pyrotechnic device" said a statement from the local prefecture.

In Paris and other cities, the yellow vest movement had called to continue the protests into the night. But police quickly dispersed several hundred protesters in the capital's symbolic Republique square using tear gas, water cannon and stun grenades to clear the area, AFP journalists said.

The protests erupted in mid-November over Macron's economic reforms, but have since grown into a wider rallies calling for the resignation of the former investment banker who critics say is out of touch with the economic struggles of ordinary French people.

Interior Minister Christophe Castaner on Twitter criticised "rioters disguised as yellow vest protesters" after Saturday's clashes.

'KEEP THE PRESSURE ON'

The weekend's protests against Macron's tax and social policies came as divisions appeared among the yellow vests -- named after the high-visibility vests they wear -- as to where to take the movement.

In a new political development, a 31-year-old nurse named Ingrid Levavasseur said this week she would lead a yellow vest list of candidates for the European elections in May.

An initial survey in the wake of the announcement suggested they would garner a respectable 13 percent of the vote.

But not every protester appeared to welcome this development.

"There is a hard core that is ready to keep fighting," said 42-year-old Gilbert Claro from the Paris suburbs. But the movement "is not meant to be political", he added.

"We have to keep the pressure on in the streets," to get their demands accepted, said Virginie, an activist in her 40s who said she had been involved in the protests from the beginning.

She and many other protesters want a citizen-sponsored referendum so ordinary people can have more of a say in government policy.

This idea has been consistently rejected by the government, although Macron made some concessions last December in a bid to end the protests.

Recent opinion polls suggest that he has regained some of the ground lost during the crisis, as he has put his case at a series of town hall events around the country.

The "great national debate" he initiated in response to the protests has nevertheless been dismissed as a public relations operation by many yellow vest protesters.

A "masquerade", said Mathieu Styrna, a 36-year-old carpenter from northern France in Paris for the protests. His impression, he said, was that the participants had been selected.

NIGHT PROTESTS

Outside Paris, several thousand protesters were marching in Bordeaux and Toulouse in the southwest, two of the cities where support for the movement has been consistently strong.

In Bordeaux, police fired tear gas and water canon to break up small groups of protesters tossing fireworks and bottles as night fell.

In the Mediterranean port city of Marseille, members of the CGT union joined the protests and about a thousand protesters turned out in the eastern city of Lyon.

In the north, officials in the city of Evreux, Normandy, reported clashes there and damage to the police and Banque de France buildings.

For the first time on Saturday, riot police using controversial defence ball launchers (LBDs) that shoot 40-millimeter (1.6-inch) rubber and foam rounds were equipped with cameras.

A French court on Friday refused a bid brought by France's League for Human Rights (LDH) and the CGT to ban the weapons, blamed for serious injuries suffered by some demonstrators.

The police authority in Paris announced the introduction of the cameras in a move for greater transparency.

On Sunday, supporters of the government will stage their first "red scarf" protest to represent what they say is "the silent majority" defending "democracy and its institutions" and denouncing the violence of the yellow vests protests.

source: news.abs-cbn.com

France's Macron reeling as tough stance against 'yellow vests' backfires

PARIS -- Emmanuel Macron intended to start the new year on the offensive against the "yellow vest" protesters. Instead, the French president is reeling from more violent street demonstrations.

What began as a grassroot rebellion against diesel taxes and the high cost of living has morphed into something more perilous for Macron - an assault on his presidency and French institutions.

The anti-government protesters on Saturday used a forklift truck to force their way into a government ministry compound, torched cars near the Champs Elysees and in one violent skirmish on a bridge over the Seine punched and kicked riot police officers to the ground.

The French authorities' struggle to maintain order during the weekend protests raises questions not just over policing tactics but also over how Macron responds, as he prepares to bring in stricter rules for unemployment benefits and cut thousands of public sector jobs.

On Sunday evening, Macron wrote on Twitter: "Once again, the Republic was attacked with extreme violence - its guardians, its representatives, its symbols."

His administration had hardened its stance against the yellow vests after the protest movement appeared to have lost momentum over the Christmas holidays.

The government would not relent in its pursuit of reforms to reshape the economy, government spokesman Benjamin Griveaux said on Friday, branding the remaining protesters agitators seeking to overthrow the government.

Twenty-four hours later, he was fleeing his office out of a back door as protesters invaded the courtyard and smashed up several cars. "It wasn't me who was attacked," he later said. "It was the Republic."

Driving the unrest is anger, particularly among low-paid workers, over a squeeze on household incomes and a belief that Macron is indifferent to citizens' needs as he enacts reforms seen as pro-business and favoring the wealthy.

Macron's government has been shaken by the unrest, caught off-guard when in November the yellow vests began blocking roads, occupying highway tollbooths and staging violent invasions of Paris and other cities on weekends.

Two months on, it has not found a way to soothe the yellow vests' anger and meet their demands, which include a higher minimum wage, a more participative democracy and Macron's resignation.

With no clear leader, negotiating with the group is hard.

'IMPASSE'

Macron sought to head off the rebellion in December with a promise of tax cuts for pensioners, wage hikes for the poorest workers and a reversal of planned fuel tax hikes, while pledging a national debate on key policy issues. He fell short.

The price tag for those concessions: 10 billion euros, enough to send French borrowing costs higher as investors fretted about debt levels and Macron's ability to reform the euro zone's second largest economy.

Laurent Berger, head of the reform-minded CFDT trade union, France's largest by members, on Sunday accused Macron's government of going it alone at a time it needed to reach out.

"We're at an impasse. We have on the one side a violent movement ... and on the other a government which thinks it can find the answers all on its own," Berger told France Inter.

Some 50,000 protesters marched through cities and towns across France, including Paris, Bordeaux, Toulouse, Rennes and Marseille.

In Paris, the street marches began peacefully but degenerated when some protesters threw punches at baton-wielding officers, torched electric scooters and garbage bins along the Left Bank's upscale Boulevard Saint Germain and set cars ablaze near the Champs Elysees. Clashes erupted in other cities too.

Both yellow vests and "casseurs", hooded youths from anti-capitalist or anarchist groups, appeared to be involved.

Labor Minister Muriel Penicaud said the prolonged unrest was hurting foreign investment.

Opposition lawmakers demanded the government put forward concrete proposals to address the yellow vests' demands, but government ministers dismissed caving in to a minority of troublemakers.

"We need to stop being a country that listens to those who cry the loudest," Education Minister Jean-Michel Blanquer told LCI news channel.

source: news.abs-cbn.com