During the U.S.-Mexico-Canada Free Trade Commission meetings in Phoenix, Arizona, on Wednesday, the Office of the U.S. Trade Representative (USTR) raised concerns over Canada’s proposed digital services tax (DST). The DST, part of Bill C-59 nearing final legislative stages, is viewed as disproportionately harmful to U.S. companies and detrimental to digital exports and Canadian innovation. It is estimated that the DST could cost U.S. companies billions of dollars and result in significant job losses.

The Computer and Communications Industry Association (CCIA) has previously criticized Canada’s approach, arguing it contravenes international consensus on taxation issues established by the OECD/G20 Two-Pillar Solution. The CCIA has also filed comments with the Canadian government regarding these concerns. Historically, USTR has launched investigations under Section 301 of the 1974 Trade Act to protect U.S. exports from similar DSTs abroad.

For over 50 years, CCIA has advocated for digital trade rules that bolster the global economy. Jonathan McHale, CCIA Vice President of Digital Trade, expressed appreciation for USTR's efforts against Canada's proposed DST.

“We appreciate USTR’s efforts in pushing back against Canada’s proposed digital services tax, and its appreciation of the harms that would materialize for U.S. exporters if this Bill were enacted,” McHale stated. “Given its likely near-term passage, we are fast approaching the moment at which action will be urgently needed. USTR recently pledged before Congress that the agency is ‘prepared to use the tools’ available in response to Canada continuing down this path. With Parliament set to act, we urge USTR to prepare a forceful response to be ready on Day 1 of Canada’s enactment of this law.”