'IKT-Produkten droht die Wiedereinführung von Zöllen'[en] 

Hugo Lueders represents CompTIA, the international Computing Technology Industry Association, in Brussels institutions. 

The WTO Information Technology Agreement dates from 1996 and has never been amended. What is the main problem with that agreement, which cuts tariffs on a range of ICT products? 

It is true that current technological development is complicating the divisions between the different categories as defined under the ITA. However, this does not give signatories the excuse to reintroduce tariffs on ITA products simply on the grounds that they have become more sophisticated and multifunctional.  

The impact of innovation on product classification was considered by the framers of the agreement. The ITA obliges its signatories to "bind and eliminate" duties on covered products wherever they are classified.  Duty suspensions, even if provided, do not cure these infirmities. As governments stated in the ITA itself: "Each party's trade regime should evolve in a manner that enhances market access opportunities for information technology products."

The Commission's threat to reintroduce tariffs on the grounds that a given ITA product has become more technologically sophisticated and has additional functionality most certainly does not allow the Commission's trade regime to evolve to enhance market access. On the contrary, the European Commission's reasoning will result in its trade regime devolving as excuses are found to raise tariffs on more and more ITA products that will inevitably become increasingly sophisticated and multifunctional. 

Wouldn't it be more effective to add new categories of products, which have evolved within the past ten years, to the agreement, rather than insist on the old ones? 

A year after the ITA was established a Committee was set up to consider the revision of the ITA to add new categories to the agreement. Ten years on, no agreement on additional categories has been reached. It is therefore essential that the original categorisation of products holds strong and is consistently interpreted among all signatory countries.

If the Commission's reasoning behind reintroducing duties on ITA products on the grounds that they are technologically more sophisticated and multifunctional is allowed to go unchecked then it could set a precedent, which could be applied to almost every ICT product, therefore resulting in the ultimate collapse of the ITA as a whole.

Why are negotiations on the product categories blocked? 

Despite the fact that the negotiations on the product categories have not progressed, this in no way implies that the originally negotiated agreement is no longer valid. The current deadlock in the Doha round negotiations has frozen discussions in many sectors; until a breakthrough actually materialises, it is critical that existing agreements are upheld, and therefore crucial that signatories live up to their commitments. If the European Commission does raise barriers on ITA products, it is more than likely that other signatories will follow suit, thus triggering a chain-reaction of protectionist barriers being raised up against a fundamental component of the global economy. 

Who benefits from the present situation and to whose detriment is it? 

The negative consequences of the Commission's re-introduction of tariffs to ITA products will significantly outweigh the marginal benefits that some component manufacturers inside Europe might receive, for it will be the consumer that will be paying inflated prices of ICT products due to these new import tariffs.

Small and medium-sized enterprises (SMEs) will significantly feel the brunt of the reintroduction of tariffs that will increase costs of ICT equipment that so many businesses rely upon.  EU productivity rates have receivedtheir biggest boost from users of IT products and services (29.8% of average annual productivity gains), not from the IT manufacturing sector itself (15.6%).  So, in order to benefit a few IT peripherals manufacturers, the Commission is willing to significantly impair the contributions of SMEs who depend on IT products for their global competitiveness.  

In the IT sector, the Commission's actions are actually short sighted as well.  IT services, not manufacturing, is where IT companies are finding themselves able to increase margins while adding value for their customers.  As IT products become commoditised, European IT companies are looking to the provision of support and other IT services as a way of maintaining profits. In particular, value-added resellers  (VARs) are transforming themselves into "solution providers" and "systems integrators", in an effort to defend profits as global competition narrows margins on IT products.  Taxing these products (through higher tariffs) will hit these IT SMEs hardest.  These tariffs  could actually force VARs and their SME customers to outsource IT services, in order to remain profitable.  

What can be done about it? 

CompTIA insists that it is imperative for the European Commission's actions to be reassessed before its reasoning sets a negative precedent which could very likely undermine the future success and integrity of the entire ITA. For the sake of consumers and SMEs, who will feel the brunt of tariffs being reintroduced on ITA products, the EU must uphold its commitments to ensuring market access for ICT products. Thsi will also boost European technological innovation and competitiveness.