In a welcome move towards strengthening trade relations, the United States has announced that it will resume trade talks with Canada after Ottawa decided to scrap its digital services tax (DST) targeting U.S. technology companies. This decision has been hailed by White House economic advisor Larry Kudlow, who described it as a positive development for the two neighboring countries.
The digital services tax, which was proposed by Canada last year, aimed to impose a 3% tax on the revenues of large technology companies providing digital services to Canadian consumers. The move was met with sharp criticism from the United States, which argued that it unfairly targeted American firms and would result in double taxation. The U.S. government had threatened to impose retaliatory tariffs on Canadian goods if the DST was implemented.
However, in a significant turn of events, Canada has now decided to withdraw its plans for the DST. This decision was announced by Canadian Finance Minister Chrystia Freeland, who stated that the government remains committed to finding a multilateral solution to the issue of digital taxation. This move has been welcomed by the United States, with Kudlow stating that the U.S. is pleased with Canada’s decision and that it will pave the way for productive discussions on trade.
The resumption of trade talks between the two countries comes at a crucial time when the global economy is facing unprecedented challenges due to the ongoing COVID-19 pandemic. Both the United States and Canada have been severely impacted by the economic fallout of the pandemic, and it is imperative for the two countries to work together towards economic recovery.
The United States is Canada’s largest trading partner, with bilateral trade between the two countries amounting to over $700 billion in 2019. The resumption of trade talks will provide an opportunity to further strengthen this trade relationship and explore new avenues for cooperation. It is also a positive sign for businesses and investors who will benefit from a more stable and predictable trade environment.
The decision to scrap the DST is a testament to the strong and friendly ties between the United States and Canada. Both countries share a long history of cooperation and have been strategic allies for decades. The U.S. and Canada have a strong economic partnership, and the resumption of trade talks will only serve to enhance this relationship.
Moreover, the resumption of trade talks between the two countries sends a positive message to the rest of the world. It highlights the importance of open and fair trade and the need for countries to work together towards finding mutually beneficial solutions. In a time when protectionist measures and trade tensions are on the rise, the U.S. and Canada have set an example by choosing to engage in constructive dialogue and finding a resolution to their trade dispute.
The decision to resume trade talks with Canada is also a significant step towards achieving the goals of the United States-Mexico-Canada Agreement (USMCA), which came into effect on July 1st, 2020. The USMCA, which replaced the North American Free Trade Agreement (NAFTA), aims to modernize and strengthen trade relations between the three countries. The resumption of trade talks with Canada will provide an opportunity to address any outstanding issues and ensure the smooth implementation of the USMCA.
In conclusion, the United States’ decision to immediately resume trade talks with Canada after Ottawa scrapped its digital services tax is a positive development for both countries. It showcases the strong ties between the two nations and their commitment to finding mutually beneficial solutions. The resumption of trade talks will not only strengthen the economic partnership between the U.S. and Canada but also send a positive message to the rest of the world. It is a step in the right direction towards promoting open and fair trade and fostering economic recovery in the face of the ongoing pandemic.
