Representatives from Amazon, Google and Facebook plus several industry associations testified before the U.S. Trade Representative (USTR) Monday about France's new digital tax.
Amazon said the 3-percent tax is "harmful" and "discriminatory." The online retail giant responded by increasing the fees third party sellers based in France pay by a corresponding 3 percent.
Last month, France passed a new 3-percent digital services tax. U.S. officials said this may unfairly target American online tech giants like Amazon, Google and Facebook.
The USTR launched a Section 301 investigation into the new French tax in July.
The agency will evaluate the comments from U.S. businesses and make a decision about what they may do in response.
"The president has directed that we investigate the effects of this legislation and determine whether it is discriminatory or unreasonable and burdens or restricts United States commerce," said U.S. Trade Representative Robert Lighthizer at the launch of the investigation.
When French President Emmanuel Macron signed the law last month, U.S. President Donald Trump threatened to tax French wine in retaliation.
A student sommelier serves a glass of red wine during the 27th contest for the best student sommelier in Tain l'Hermitage, southeastern France, May 24, 2019. /VCG Photo
"They should not have done it. So I may do that, I may do that, I've always liked American wines better than French wines – even though I don't drink wine. I just like the way they look. OK. But the American wines are great, American wines are great, and they didn't do the right thing when they start taxing our companies," said Trump in July.
But French officials said this has nothing to do with targeting American companies, adding the digital tax is aimed at creating a level playing field for local French businesses.
"Our American friends should not understand the decision taken by France to have its own national taxation of digital activities as any willingness of targeting the American companies. That's not the case. We are not willing to target the American companies. We are just willing to have a fair and efficient taxation of digital activities," said French Finance Minister Bruno Le Maire.
Later this month at the G7, France will push for a universal tax on digital activities. It's not clear if the U.S. will go along with such a plan.