EU-US trade row erupts over IT products
US fights Europe over computer taxes
May
2008 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.At a conference in Singapore in December 1996,
29 trade ministers signed the Declarationexternal 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
appliedexternal 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).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 commentedPdf external : “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 reactedexternal 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,” commentedexternal 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) “welcomesPdf 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”.