Transatlantic IT row heats up as US requests WTO ruling[fr][de] 

The US request, supported by Japan and Taiwan, follows an earlier complaint filed by the three parties in May (EurActiv 30/05/08), asking for peaceful dispute settlement with the EU. The bloc had strongly rejected this complaint, saying it had offered to reopen talks on the 1996 Information Technology Agreement (ITA). 

Since the consultation period did not lead to an agreement within the two months deadline, the trade body will now be forced to take a legally-binding decision. The procedure is expected to take between 12 and 18 months. 

The US and Japan's main bone of contention is the EU's policy not to consider new products developed from goods already in the ITA to be covered by the agreement. In other words, while traditional printers for example are duty-free in the EU, more recently evolved versions, also capable also of scanning or faxing, are not. 

The US argues that such technological developments were foreseeable and that new machines should benefit from similar tariff reductions as those already developed ten years ago. 

The products under scrutiny are LCD monitors and flatscreen TVs, which Brussels insists are different from the computer displays covered by the ITA. Those products are charged with a 14% duty, which also applies to cable converter boxes with Internet access. 

The US and Japan are also calling for multifunctional digital printers and video recorders to be included, but the EU argues that printers with other capabilities, such as faxing, are copiers not printers, and therefore face a six percent duty. 

"In effect the EU is taxing innovation - a move that could impair continued technological development in the information technology industry and raise prices for millions of businesses and consumers," US Trade Representative Susan Schwab said in a statement.

US officials say the EU imports $11 billion of these products each year, estimating that global exports of the products under dispute would total more than $70 billion. 

"We regret that formal consultations have not been successful in resolving our concerns over the duties that the EU is imposing on several high-tech products," US Trade Representative Susan Schwab said in a statement from Washington. 

"We believe that these duties are inconsistent with the EU's commitments on these products, and that they discourage technological innovation in the IT sector," Schwab added. "However, the EU claims it can now charge duties on these products simply because they incorporate technologies or features that did not exist when the ITA was concluded," she said. 

A spokesman for EU Trade Commissioner Peter Mandelson said the US was seeking to change the ITA through litigation while rejecting an EU suggestion to review the pact's coverage with all its signatories. Changing the accord "is not something we can negotiate bilaterally with the United States," he declared. 

Mark MacGann, the director general of EICTA, a digital industry association that includes US and Japanese giants like Apple and Sony and EU companies like Nokia and Siemens, said he was "very disappointed" that both sides could not reach an agreement through dialogue. .

Speaking to EurActiv, he described the US decision as a "serious setback" for European industry.