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EU duties reach as high as 14% and make US-sourced imports virtually ''non-competitive,'' says trade group

BRUSSELS, Belgium – 09/15/08 – The European Union (EU) has said that it is proposing the elimination of its tariffs on imports of “newly developed” high-tech goods in an effort to avoid a costly World Trade Organization-refereed showdown with the US, Japan, and Taiwan.

The Brussels-headquartered European Commission (EC) said that it is proposing “updates and expansions” modifications to the 1996 Information Technology Agreement (ITA) that was aimed boosting trade by eliminating tariffs on information technology equipment.

The ITA deal originally had 29 signatories representing more than 90% of world trade in information-technology products, but has since grown to 71 countries.

The confrontation has revolved around the granting of rights under the agreement to “certain” new telecommunications products and equipment that have entered the market since the accord went into effect.

Washington has charged that the affected goods are already covered by the deal and that the 27-nation bloc has failed to abide with World Trade Organization (WTO) directives to correct the situation. The US joined with Japan and Taiwan in filing the complaint with the WTO earlier this year.

The 27-member EU delayed a formal WTO investigation into its tariffs last month, but cannot under the rules to do so a second time. An investigative panel is expected to be established later this month.

The EU issued a statement saying that “negotiations would solve disagreements "within a matter of months, not years” and that amendments to the existing agreement “can only be made on the basis of consensus…and not as a result of litigation by some members."

It wants the deal extended, it said, “so that it includes more countries and helps eliminate other barriers to imports than tariffs.”

The basic agreement, said EU Trade Commissioner Peter Mandelson, “remains a milestone duty-free agreement, but it risks being left behind after 12 years of technological development. We need an ITA for the 21st century that will continue to benefit our customers and businesses.''

The “certain” products in question are flat-panel computer monitors, cable and satellite boxes that can access the Internet, and multi-function printers that can also scan, fax, and copy.

EU duties on those goods reach as high as 14% and make US-sourced telecommunications equipment virtually “non-competitive” in the European market, according to the Washington, DC-based Information Technology Industry Council (ITIC), whose members include Dell, Canon USA, Sony Electronics, National Semiconductor, Oracle, Panasonic, Texas Instruments, and Unisys.

US exports of the goods in question currently amount to less than 5 % of the $11 billion the EU imports annually.

The ITIC’s European counterpart – the Brussels-headquartered European Information, Communications and Consumer Electronics Technology Industry Association – welcomed the EC proposal to rework the ITA, but said that “we absolutely overwhelmingly disagree with the commission's decision to classify '' the three digital products in a way that subjects them to duties.”

Those products account for more than $1.5 trillion of exports worldwide, or a fifth of total global exports of manufactured products, up from $600 billion in 1996.

The Office of the US Trade Representative (USTR) in Washington declined to comment on the EU proposal.

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