U.S. Files WTO Complaint Against EU Tariffs on IT Products
The U.S. formally challenged EU tariffs on some information technology products, said U.S. Trade Representative Susan Schwab. The U.S. filed Wednesday in Geneva for World Trade Organization dispute-settlement consultations with the EU. Japan also filed. The U.S. initiated the proceedings because the EU violated WTO’s 1996 Information Technology Agreement by putting duties on products that should be duty-free, Schwab said. If a 60-day settlement proceeding fails, the U.S. will litigate, she said.
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
The U.S. disputes EU duties on $70 billion in exports, including cable and satellite boxes that can access the Internet, flat-panel computer monitors and some computer printers that can also scan, fax or copy. The EU has a 6 percent duty on the multifunction printers and 15 percent duties on the other two categories. The products are the subjects of the EU’s most “egregious” offenses, but it’s “certainly possible” the U.S. will sue over digital cameras or other products, Schwab said.
The EU is fulfilling its ITA obligations, the European Commission said. Most multifunction printers aren’t covered by the ITA, it said. Nor are set-top boxes that are mainly PVRs, it said. Also, “what the U.S. claims are LCD computer monitors are in fact screens equipped with a Digital Visual Interface to allow use with consumer electronics such as DVD players,” the EU said. Such screens aren’t covered, it said.
The EU wrongly concluded that the devices have evolved into new products by adding technologies and features, Schwab said. “The EU is effectively taxing innovation -- a move that could impair continued technological development and raise prices for millions of businesses and consumers,” Schwab said. “Europe should be working with the United States to promote new technologies, not finding protectionist gimmicks to apply new duties to these products.” The EU argument would make the ITA largely irrelevant, Schwab said. “If ITA participants only provided duty-free treatment to products with the technology that existed at the time the ITA was concluded, very few ITA products would be eligible for duty-free treatment today,” she said.
Other WTO members may join the U.S. and Japan in challenging EU duties, Schwab said. “There are quite a number of other countries that produce these IT products and have expressed an interest in perhaps joining later.”
The EC urged renegotiation of the ITA’s scope of products to resolve the matter. “The EU has respected its ITA obligations and has explicitly said it is willing to reassess the current ITA product coverage to reflect new technology in a negotiation with all ITA signatories,” it said. “However, the U.S. refuses to do this even though the ITA is not a bilateral agreement and changes to its criteria cannot be made as a result of bilateral litigation.”
The U.S. shouldn’t have to renegotiate the ITA, Schwab said. The ITA was designed to allow technology advances, she said. The U.S. is “in favor of expanding the scope of high- technology agreements, including the ITA,” she said. “However, for that to happen, it needs to be a credible agreement where countries can’t opt out of commitments made ten years earlier simply by reclassifying products.”
It’s too late to renegotiate, John Neuffer, Technology & Trade vice president for the Information Technology Industry Council, said on a conference call. “Two or three years ago, that might have been a more credible line of discussion. But given the EU’s bad behavior in upholding its trade obligations here, it certainly is not creating an environment where we would be interested.”
The U.S. began work on the matter 20 months ago, Schwab said. “We've had at least four consultations with the EU,” she said. The U.S. prefers resolving trade disputes “through consultation rather than resorting to litigation” but realized that path wouldn’t work when the EU approved another tariff this month, she said. “Everybody wanted to give the EU time to do the right thing,” Neuffer said. But after the EU’s ruling, “enough [was] enough.”
Leaders of the House Ways and Means Committee applauded the USTR action. “Legislation is needed to ensure a more assertive approach to the enforcement of our international agreements and trade laws,” Committee Chairman Charles Rangel, D-N.Y., and Trade Subcommittee Chairman Sander Levin, D-Mich., said in a joint statement. “The Committee will consider enforcement legislation in the coming months.”
The Information Technology Association of America also gave kudos. “This is a straightforward case,” said ITTA President Phil Bond. “The whole point of the [ITA] is to encourage the global growth of the Internet and the development of a robust IT infrastructure, at the lowest possible prices -- customs duty-free. The economic benefits of IT are well established, and far greater than the short-term revenue resulting from increased customs duties.”