US, EU at odds over tech taxes

29-05-2008

by Billy MacInnes

The EU has attacked the decision by the US to refer its tariffs on LCD monitors, multifunction printers and TV set-top boxes to the World Trade Organisation.

The US and Japan revealed they were taking action against the European Union at the World Trade Organisation (WTO) on 28 May because they believe the tariffs charged by the EU on certain products went against the spirit of the WTO's Information Technology Agreement (ITA), signed in 1996, which eradicated duties on a raft of technology goods.

Announcing the move, US trade representative Susan Schwab urged the EU "to eliminate permanently the new duties and to cease manipulating tariffs to discourage technological innovation".

The US case is backed by the Information Technology Industry Council which includes a significant number of technology companies such as Hewlett-Packard among its membership. John Neuffer, vice president for technology and trade at the council claimed duties could be as high as 14 percent and argued the products involved were "supposed to be entering Europe tariff-free under the ITA".

He accused the EU of "violating the letter and spirit of the ITA, which has been the most successful, pro-innovation and pro-growth agreement of the past decade".

But the EU has refused to back down, claiming the US complaint is "unfounded". While computer monitors, for example, are covered by the ITA, screens for TVs and DVD players are not. The EU argues that dual-use products, such as LCD monitors which can be used as TVs with a digital visual interface, are not covered by the ITA.

Products that have been given multiple functions as a result of technology changes such as multifunction printers "are objectively different products falling outside of the original product categories covered by the ITA", the EU said in statement.

In addition, the EU claimed it had always been willing "to reassess product coverage under the ITA to reflect changes in technology since 1996. The EU has said it is willing to negotiate with all other ITA members. The US is not willing to do this. Why not?"

For its part the US says it has been trying for almost two years to persuade the EU to drop the tariffs and is now prepared to ask the WTO to form a panel to hear its complaint if Brussels does not take action on the issue in the next 60 days.