US Requests WTO Panel In Challenge To EU High-Technology Tariffs

by Glen Shapiro, LawAndTax-News.com, New York

21 August 2008

United States Trade Representative Susan C. Schwab announced on Tuesday that the US, together with Japan and Chinese Taipei, requested the World Trade Organization (WTO) to establish a dispute settlement panel to review whether the European Union (EU) has failed to accord duty-free treatment to certain products covered by the WTO Information Technology Agreement (ITA) and thus entitled to such treatment.

“We regret that formal consultations have not been successful in resolving our concerns over the duties that the EU is imposing on several high-tech products,” explained Ambassador Schwab, adding:

“The EU committed to bind and eliminate duties on ITA products in its WTO tariff schedules. We believe that these duties are inconsistent with the EU’s commitments on these products, and that they discourage technological innovation in the IT sector.”

Requesting a panel is the next step in the formal WTO dispute settlement process.

The United States requested WTO consultations with the EU on the 28th of May, and consultations were held in late June and mid July. As consultations have failed to resolve the dispute, the United States is requesting that a dispute settlement panel be established to determine whether the EU is acting consistently with its WTO obligations.

Japan and Chinese Taipei also requested consultations with the EU on the 28th of May and the 12th of June, respectively, and have joined the United States in requesting the establishment of a dispute settlement panel.

According to the complaint, the EU in the past several years has adopted a series of measures that resulted in new duties on imports of specific high-tech products – cable boxes that can access the internet, flat panel computer monitors, and certain computer printers that can also scan, fax and/or copy.

Global exports of these products were estimated at over USD70bn in 2007.

These products were included in the ITA – an agreement among a subset of WTO Members, including the United States and the EU, that commits them to accord duty-free treatment, on a non-discriminatory (i.e., Most Favored Nation) basis to imports of information technology products.

However, the EU claims it can now charge duties on these products simply because they incorporate technologies or features that did not exist when the ITA was concluded.

The US argues that, in effect, the EU is taxing innovation – a move that could impair continued technological development in the information technology industry and raise prices for millions of businesses and consumers.

The WTO Dispute Settlement Body will consider the joint request of the United States, Japan, and Chinese Taipei for the establishment of a panel at its next meeting, on the 29th of August.

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