President Donald Trump
Joshua Roberts | Reuters
President Donald Trump could fight back against France’s new tax on U.S. technology companies by unleashing biting tariffs on key French goods, according to trade experts.
The French Senate on Thursday passed a 3% tax that will affect American firms such as Facebook and Google. The tax, already approved by France’s National Assembly, would apply to companies that draw about $850 million in revenue worldwide from digital services — and about $28 million from within France.
Ahead of the tax’s passage, the Office of the U.S. Trade Representative started an investigation into whether the measure “is discriminatory or unreasonable and burdens or restricts United States commerce,” U.S. Trade Representative Robert Lighthizer said Wednesday. Once it finishes the probe, the agency could retaliate with tariffs or other steps to deter France — and potentially other countries — from putting new taxes on top U.S. companies.
“Once the investigation is complete, USTR will determine based on the findings of the investigation whether and what action should be taken,” the USTR said in a statement Thursday when asked how the administration could hit back at France.
The probe under Section 301 of the Trade Act of 1974 could take up to a year, according to Jennifer Hillman, a Georgetown Law professor and former USTR and World Trade Organization official. She expects it to end “much faster” than that, and thinks “chances are high” that the Trump administration will find a violation.
French wine drinkers beware
The Trump administration will most likely respond by slapping tariffs on iconic French goods, experts said. That could mean duties of up to 100% on signature French products. Think wine, cheese or perfume.
“I would expect steep tariffs on a very symbolic product, which is obviously the French spirits and wine industry. … That’s symbolic, and it does hurt economically, as well,” said Jorn Fleck, associate director of the Future Europe Initiative at the Atlantic Council.
In a CNBC interview last month, Trump suggested he could put tariffs on French wine. He said California wine producers have complained to him about France putting higher tariffs on imports than the U.S. does.
“And you know what, it’s not fair. We’ll do something about it,” he said.
France exported 3.2 billion euro (about $3.6 billion) in wine to the U.S. last year, making America its biggest export market, according to the Federation of French Wines and Spirits Exporters.
Trump’s other options to retaliate against France
The investigation gives Trump options to hit French industries beyond wine. For instance, he could put smaller tariffs of up to 5% on all French imports. But the move is unlikely, according to Gary Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics.
The Trump administration has another alternative that experts consider more drastic. The White House could use Section 891 of the Internal Revenue Code to double taxes on French companies doing business in the U.S.
When France was mulling the digital tax last month, Sens. Chuck Grassley of Iowa and Ron Wyden of Oregon — the top Republican and Democrat on the Senate Finance Committee, respectively — urged Treasury Secretary Steven Mnuchin to consider raising taxes on French subsidiaries. But experts believe the White House will prefer targeted tariffs to increased taxation.
“That would be pretty draconian, and I think would not be proportional” to France’s digital tax, Hufbauer said.
As the U.S. investigates its options to retaliate, it will also work to strike a multilateral agreement on digital taxation with countries in the Organization for Economic Cooperation and Development, or OECD. But a resolution is not expected until next year.
The slow, multilateral OECD process is a tough sell for Trump, a showman who likes to make blunt political points. He may prefer a move he can tout as a concrete example of cracking down on the European Union, especially as he runs for reelection in 2020.
“The president can use this for his political advantage,” Fleck said. “You’ve heard him talk about the EU being almost worse than China in terms of some of its trade practices.”
It remains to be seen whether Trump wants to open another front in his global trade conflict during an election season. He is already scrambling to reach a deal with China as the world’s two largest economies try to avoid a widening trade war.
In May, his administration delayed tariffs on EU cars and auto parts imports by up to six months.
Twitter CEO Jack Dorsey announces Bluesky social media standards push
CEO of Twitter, Jack Patrick Dorsey, speaks during an exclusive interview with Hindustan Times at Twitter India office, at the Crescent, on November 14, 2018 in New Delhi, India.
Burhaan Kinu | Hindustan Times | Getty Images
Twitter CEO Jack Dorsey announced the company is funding a new research team that will develop an “open and decentralized standard for social media,” in part to address some of the current problems with the platform.
The idealistic long-term vision is to make disparate social media networks more like email, so that users could join different networks but still communicate with each other no matter which one they’re using. Shared technical standards would also make it easier for users to gain some control over how these networks recommend content, which could reduce the tendency to guide users to the most outrageous material and users in hopes of keeping them engaged, Dorsey believes. It could also make it easier for the social networks to enforce restrictions against hate speech and other abuse, essentially helping them share the load at a lower cost.
There are already social media platforms that operate on a decentralized framework, the most popular of which is Mastodon, an open-source social network that’s often used as an alternative to Twitter. Tim Berners-Lee, the founder of the World Wide Web, has also launched several projects advocating for a decentralized internet.
But unlike these projects, which have struggled to gain traction, Twitter already has a devoted user base of more than 300 million people, which could give Dorsey more traction in trying to push the standard through and convince other social networks to lend support. However, it seems unlikely that Facebook, which currently dominates the space with an audience of more than 2 billion users, would be willing to cede control to an external coalition. A Facebook spokesperson did not immediately respond to a request for comment.
The Bluesky vision
Dorsey announced the vision and team, called Bluesky, in a string of tweets on Tuesday:
Bluesky will include up to five architects, engineers and designers charged with creating the standards. The goal is that one day Twitter will become a “client” of the network, though it’s likely the standard will take several years to develop, Dorsey said.
“For social media, we’d like this team to either find an existing decentralized standard they can help move forward, or failing that, create one from scratch,” Dorsey said. “That’s the only direction we at Twitter, Inc. will provide.”
The standard would allow Twitter to focus its “efforts on building open recommendation algorithms which promote healthy conversation,” Dorsey added.
Focusing on recommendation algorithms could help Dorsey deflect some of the content moderation problems the company continues to face, such as its failure to curb hate speech, said Jennifer Grygiel, a social media professor at Syracuse University. In an open source framework, Twitter would handle how content surfaces on the platform, akin to Google searches, instead of hosting and managing the content itself.
By announcing Bluesky, Twitter appears to have realized that hosting and managing content “is a business model that doesn’t have many benefits,” Grygiel added.
“They’re looking to deal less with the responsibility that is the walled garden, aka the platform,” Grygiel said.
When asked to elaborate on the Bluesky project, a Twitter spokesperson pointed to Dorsey’s tweets and said in a statement: “We’ve long demonstrated our commitment to doing critical work in the open and empowering people to build off of the fundamentals of our service. Apart from the technical elements outlined by Jack today, this is about exploring the fullest and most participatory vision of our service.”
Interest rates unchanged, sees no changes through 2020
WASHINGTON — The Federal Reserve held interest rates steady following its two-day meeting this week and indicated that no action is likely next year amid persistently low inflation.
Concluding a year that saw the central bank take down its benchmark rate three times, the Federal Open Market Committee on Wednesday met widely held expectations and kept the funds rate in a target range of 1.5%-1.75%.
In its statement explaining the decision, the committee indicated that monetary policy is likely to stay where it is for an unspecified time, though officials will continue to monitor conditions as they develop. The decision to keep rates unchanged was unanimous, following several dissents in recent meetings.
“The Committee judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective,” the statement said.
“The Committee will continue to monitor the implications of incoming information for the economic outlook, including global developments and muted inflation pressures, as it assesses the appropriate path of the target range for the federal funds rate,” the committee added.
The language is consistent with recent statements from Fed Chairman Jerome Powell and his colleagues, who have said policy is in “a good place” and likely to remain unchanged as long as current conditions persist.
Those sentiments also were reflected in the likely path forward.
‘Dot plot’ shows no 2020 hike now
Through the “dot plot” of individual members’ future projections, the FOMC indicated little chance of a cut or increase in 2020.
At the committee’s September meeting, individual members were split on what could happen next year, with eight members seeing no change and nine indicating the likelihood of one or more increases. One member even foresaw three hikes. On balance, the estimate then was for at least one hike in 2020.
Wednesday’s projections saw a decided downward shift in the dots, with just four of 17 members anticipating one quarter-point move up in 2020.
There also was a general downward shift for 2021, with the chart pointing to at least one and possibly two increases. The central projection came down for each of the four years included in the committee’s estimates. The median expectation for the funds rate is 1.6% in 2019 and 2020, down from 1.9% in the September estimate, and rising to 1.9% in 2021, compared with the previous estimate of 2.1%. The 2022 projection also came down to 2.1% from 2.4%, though the longer-run estimate remained consistent at 2.5%.
The more dovish tilt came without any changes in expectations for U.S. economic growth. The committee again projected 2019 to finish with a 2.2% gain in gross domestic product, followed in consecutive years by 2%, 1.9% and 1.8% gains.
Members did reduce their inflation expectations this year.
They now see the core personal consumption expenditures gauge to register just 1.6% growth this year, down from the 1.8% projection in September. They kept their estimates consistent at 1.9% in 2020 and 2% for the following two years.
The committee releases its economic estimates quarterly. While only 10 members vote on rate policy, all 17 FOMC officials have input on the economic and rate projections.
The FOMC operates under a dual mandate of full employment and price stability. Unemployment is running at a 50-year low and job creation is coming off a blockbuster November.
However, inflation has remained stubbornly below the 2% level that the Fed considers healthy. Members in recent weeks have discussed multiple strategies to address the issue, though Wednesday’s statement did not indicate any changes to the Fed’s approach.
The statement also did not elaborate on any matters relative to the upset in overnight repo operations that took place in mid-September. Overnight interest rates spiked following a cash crunch, and the Fed since then has been conducting a series of operations to keep liquidity flowing and to make sure the funds rate stays in the target range.
An implementation note attached to the meeting statement did say the Fed’s offering rate is now 1.45%, down 10 basis points in October.
The best places to work in Singapore in 2020
Technology giant Google has emerged as the best place to work in Singapore in 2020, a new study has found.
The Alphabet-owned employer led the charge in a list dominated by familiar tech names such as Facebook, Amazon and Microsoft, according to Glassdoor’s inaugural report on “Best places to work in 2020 in Singapore.”
The top 10 shortlist, which also includes major names from banking, oil and gas and insurance, is based on anonymous feedback from employees who submitted reviews on their employer to Glassdoor in 2019. To be eligible for the list, employers needed to have 1,000 or more employees.
Those reviews included feedback on a range of aspects including career opportunities, compensation, senior management, and culture and values.
That feedback was then calculated as an overall score on a five-point scale, with 1 indicating “very dissatisfied” and 5 showing they were “very satisfied.” Below are the scores rounded to the nearest percentile.
The best places to work in Singapore in 2020
Culture tops the charts
All of Singapore’s top employers of 2020 are international firms. Eight of the leading 10 are headquartered in the U.S., while Shell is headquartered in the Netherlands. AIA is a Hong Kong-based pan-Asia company.
Glassdoor’s president and chief operating officer, Christian Sutherland-Wong said the findings speak to the growing emphasis big name employers are placing on culture and inclusivity — a trend he said he expects to extend well into the next decade.
“The Employees’ Choice Awards for the Best Places to Work in 2020 mark the start of a culture-first decade,” said Sutherland-Wong.
“Gone are the days when company culture could be considered a fluffy or non-essential business metric. In today’s age of workplace transparency, the mission, culture and values of a company are crucial when it comes to employers’ ability to recruit and retain top talent. We’re proud to celebrate exceptional employers who stand out in the eyes of their employees.”
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