US Requests Trade Dispute Consultations with Canada Over Digital Services Tax

Aug 30, 2024, 06:08 PM

The United States has initiated trade dispute consultations with Canada over its newly enacted digital services tax. The U.S. Trade Representative, Katherine Tai, has taken this step under the United States-Mexico-Canada Agreement (USMCA), arguing that the tax is discriminatory and violates USMCA's non-discrimination obligations on Cross-Border Trade in Services and Investment. The Biden-Harris administration has labeled the tax as inconsistent with Ottawa's trade deal obligations. If the issue is not resolved within 75 days, the USTR may request a USMCA dispute settlement panel. Despite the U.S. move, Canadian government officials have expressed that they are neither concerned nor surprised by the development.