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EU Planning Tax On Mobile Phones

by Ulrika Lomas,, Brussels

23 December 2008

The European Commission has proposed that member states impose new customs duties on top-of-the-range mobile telephones, in a move that could once again put the European Union on a collision course with its main trading partners, including the United States.

The proposal, which was presented to member states earlier this month, would change the classification of certain 'multi-function' mobile telephones for customs purposes so that they would face import duties of up to 14%.

The proposal follows moves by the governments of Germany and the Netherlands to reclassify the new generation of technology-laden mobile phones in a similar way, and is aimed at achieving a level customs duty playing field across all member states of the EU. However, it has understandably provoked strong criticism from mobile phone manufactures.

“We are witnessing a lack of joined-up government in the EU. At a time when Europe is confronted with protracted recession, there is a need to reassure consumers," commented Mark MacGann, Director General of the European Information & Communications Technology Industry Association (EICTA), the body representing the industry in the EU.

“The Industry calls on the Commission and the member states to refrain from any new customs decisions that will increase the cost of technology in Europe, and instead accelerate the adoption of the pro-consumer, pro-technology policies outlined in the Commission’s own Economic Recovery Plan,” MacGann added.

However, aside from the obvious detrimental effects that the new tax could have on the sales of mobile phones, the EICTA also points out that the move would be illegal under the Information Technology Agreement (ITA), a trade agreement signed by members of the World Trade Organization (WTO) in 1996 which commits signatory countries to maintaining zero rates of customs and import duties on high-tech goods such as LCD monitors, set-top boxes with a hard drive and multifunctional devices such as printers with built-in scanners and copiers, to encourage their manufacture.

"These decisions appear in total contradiction to the EU’s commitments under the Information Technology Agreement (ITA)," the EICTA argues.

The WTO is currently investigating the EU's customs duties regime on goods covered by the ITA after receiving complaints from the United States, Japan and Taiwan. The EU has claimed, however, that these newer, more advanced forms of technology are in fact "consumer products" rather than forms of high technology, and were developed after the agreement was drawn up.

It is understood that the plan to reclassify high-end mobile phones for customs purposes will be discussed by the EU Customs Code Committee in February 2009.

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