The Office of the U.S. Trade Representative announced May 28 that the U.S. and Japan have filed WTO cases against the European Union concerning its tariffs on certain high-tech goods covered by the Information Technology Agreement. The ITA provides for the duty-free treatment of 97 percent of world trade in information technology products, but the USTR states that in recent years the EU has begun imposing duties of up to 14 percent on some of those products “because they incorporate newer technologies or additional features.” The products at issue in the U.S. complaint are cable and satellite boxes that can access the Internet, flat-panel computer monitors, and certain computer printers that can also scan, fax and/or copy. The Information Technology Industry Council claimed in a letter to the USTR last year that the EU is planning to exclude additional products from ITA coverage as well.
Critics of the EU tariffs say they pose short-term as well as long-term dangers. The EU is using “protectionist gimmicks” to effectively tax innovation, the USTR said, “a move that could impair continued technological development in the information technology industry and raise prices for millions of businesses and consumers.” The ITIC letter expressed concern that other ITA signatory countries could follow the EU’s lead, resulting in the proliferation of tariffs on IT products around the world. Members of the House of Representatives added in an Aug. 1 letter to the USTR that allowing the EU tariffs to go unchallenged would erode confidence in the “sanctity of trade agreements,” which could hinder the chances for congressional approval of future trade deals.
The EU responded by rejecting claims that it is not fulfilling its obligations under the ITA. A press release from the European Commission asserts that the EU bases its customs classifications exclusively on the objective characteristics of the products and that where changes in technology have given a product multiple functions it may fall outside of the original categories covered by the ITA. “Both the spirit and explicit provisions in the ITA make it clear,” the commission said, that expanding ITA coverage “to new products to reflect technological change would not be automatic, but based on periodic review by signatories.” The EU has said it is willing to renegotiate the ITA, which could also allow the resolution of other IT trade-related problems such as non-tariff barriers and limited geographical coverage that does not include “important new players such as Mexico, Brazil, Chile or South Africa,” but that the U.S. has “refused to do this.”
World Trade/Interactive
