After months of silent scramble, a battle between the EU and the US on IT customs tariffs erupted after Washington decided to file a formal complaint to the World Trade Organisation (WTO) against European duties on certain high tech goods, including flat-screen TVs and multifunctional printers.
The official complaint was filed by the US, along with Japan, on Wednesday (28 May). It targets tariffs imposed by the European Union on a range of IT products, of which global exports are estimated to amount to more than €450 billion.
The American and Japanese authorities are first requesting WTO dispute settlement consultations with the EU to resolve the issue. But the consultation procedure can only last a maximum of two months, and after that, in the absence of an agreement, WTO experts will be forced to take a legally-binding position.
What has angered the US and Japan is the EU’s policy not to consider new products developed from goods already in the ITA as covered by the agreement. In other words, while traditional printers are duty-free in the EU, more recently evolved versions, also capable also of scanning or faxing, are not.
The US argument is that such technological developments were foreseeable and that new machines should benefit from similar tariff reductions as those already developed ten years ago. “We all know that technology is organic. New features are developed, and advances are made, almost before we walk out of the store, and certainly before the ink is dry on most of our agreements,” said US Trade Representative Susan Schwab.
But the EU retorts that the deal made in 1996 is explicit regarding the products it covers. It insists that the only way to review the list is therefore to proceed to new overall negotiations on the ITA. Brussels says it has requested this already on several occasions but that the US has always opposed it.
The products under scrutiny are LCD monitors and flat-screen TVs, which Brussels argues are different from computer displays, indeed covered by the ITA. The US and Japan are also calling for multifunctional digital printers (alongside traditional printers) and video recorders (alongside set-top boxes able to record but mainly to connect to the Internet) to be included.
US Trade Representative Susan Schwab commented: "Europe should be working with the United States to promote new technologies, not finding protectionist gimmicks to apply new duties to these products."
The European Commission's Trade services reacted with the following statement: "The only way to adapt the ITA to changed technologies is to renegotiate the product scope of the ITA with all its signatories, as the ITA foresees. Such a renegotiation would also allow other problems encountered in trade of IT products, the non-tariff barriers and the geographical coverage of the ITA to be addressed. The EU has proposed such a negotiation, but the US has not followed up on such an offer."
"European industry is disappointed that the parties have not been able to find agreement within the ITA Committee in the WTO," commented EICTA, a digital industry association that includes US and Japanese giants like Apple and Sony and EU companies like Nokia and Siemens.
"It is clear on both sides of the Atlantic that storm clouds are gathering. We hear ominous voices challenging the importance of concluding and respecting free trade agreements. Protectionism and economic patriotism are harmful to the economy, and lead to political and economic isolation," the statement concludes.
Comptia, a computing technology industry association (whose board is composed among others by representatives of Microsoft, Lenovo, Symantec and Siemens North America) "welcomes the joint US and Japan legal action at the WTO to formally raise a longstanding ICT trade policy issue on the Information Technology Agreement (ITA). This complaint presents a great opportunity for the EU to reject short-sighted temptations to hide behind protectionist tariffs".
At a conference in Singapore in December 1996, 29 trade ministers signed the Declaration on trade in information technology products. The declaration led to the adoption of the Information Technology Agreement (ITA) in July 1997.
The EU, the US, Japan, Australia, Canada, Switzerland and Turkey were among the first participants in the agreement, which aims to reduce tariffs on Information Technology (IT) products.
At the moment, the agreement is applied in around 70 countries in the world, but excludes important international players such as Brazil, Mexico and South Africa.
Brussels has been pushing for months for the ITA to be renegotiated to include new states and review the set of goods concerned.
The row is occurring while the new global trade pact, under discussion in the Doha Development Round, remains uncertain after six years of negotiations (see our Links Dossier).
- In the next 60 days, negotiations will try to resolve the dispute in the framework of the WTO.
- European Commission:Reaction to US-Japan WTO complaint(28 May 2008)
- European Commission:Website on trade issues related to the electronic sector
- WTO:Declaration on Trade in Information Technology Products(13 December 1996)
- WTO:Background on ITA agreement
- WTO:ITA signatory countries
- US embassy in Brussels:Ambassador Schwab's comments on EU IT trade practices(28 May 2008)
Business & Industry
- EICTA:Statement on EU-US dispute(28 May 2008)