Bridges Weekly Trade News Digest • Volume 14 • Number 30 • 8th September 2010

EU Tariffs on High-Tech Products Illegal, WTO Rules

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The EU violated its commitments under multilateral trade rules by levying import duties on high-tech electronic products like flat-panel computer monitors, a WTO dispute panel recently determined, siding with Japan, Taiwan, and the US.

The three governments had alleged that EU duties on the products in question violated the Information Technology Agreement (ITA), a 1997 accord that lowered tariffs to zero on nearly all IT products among participating countries - which include all major traders.

The EU had argued that it was justified in charging duties as high as 14 percent on some so-called ‘new generation’ high-tech products, which were developed after 1996, because they were consumer goods rather than IT products. Flat-panel computer monitors, for instance, should be categorised with video monitors, as they can be connected with DVD players, the EU suggested. Thus, they should not, along with the other products including multi-function printers, be covered by the ITA’s zero tariff commitment, the EU argued.

The complainants contended that the EU was undermining the ITA. “The EU is taxing innovation - a move that could impair continued technological development in the information technology industry and raise prices for millions of business and consumers,” said a statement from the US trade representative’s office welcoming the WTO ruling.

When launching the dispute in 2008, Susan Schwab, the US trade representative at the time, said that if ITA participants provided duty-free treatment only to technology that existed in 1996, very few IT products would be eligible.

The three governments had accused Brussels of using tariff protectionism to encourage domestic investment, saying that EU was aiming to maintain a tariff wall in order to move high tech production to Eastern Europe.

Electronics companies in the US and Asia, including Hewlett Packard and Samsung, welcomed the decision. Last month, officials in Taiwan said that the EU duties were costing its exporters of flat screens $611 million a year in duties.

The EU, which has called for negotiations to update the ITA, has not yet indicated whether it will appeal the decision.

ICTSD reporting; “EU Says WTO High-Tech Goods Ruling May Cost 300 Million Euros,” BLOOMBERG, 17 August 2010; “EU-WTO dispute ruling on high-tech products,” EURACTIV, 17 August 2010; “U.S., Japan challenge European tech tariffs at WTO,” REUTERS, 28 May 2008.